Uncapped university places led to increase in dropouts, debt

Australia’s eight-year experiment with demand-driven higher education funding, in which places were uncapped, led to more enrolments but also had a distinct downside.

UNCAPPED university placements led to a surge in enrolments but extra students were more likely to drop out and rack up unnecessary debts, a new report has found.

The Productivity Commission today released its findings into the demand-driven higher education funding system, which was active in Australia from 2010-17.

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The change, which saw funding based on enrolments rather than a fixed sum, led to an influx of students who previously would not have engaged in higher education.

Productivity Commission chairman Michael Brennan said the overall success of the scheme was mixed, with the additional students recording greater drop-out rates and many starting university unprepared.

Mr Brennan said enrolments during the period jumped by more than 35 per cent, with extra students more likely to be from low socio-economic backgrounds or the first in the family to go to university.

However 21 per cent of the additional students had dropped out before they turned 23, compared with just 12 per cent of other students.

Those who did drop out had racked up an average of $12,000 in costs, and some as much as $20,000.

Mr Brennan said the additional students were more likely to enter university with lower ATAR scores and were more likely to have lower numeracy and literacy scores when traced back to school.

“It’s reasonable to conclude it was a more challenging adjustment,” he said.

“Our school system needs to prepare large numbers of young people for university, and many university students need greater academic support to succeed.”

There was also little change to the rates of rural and regional and Indigenous students attending university.