Plans for bigger, fairer higher education not without its problems

Minister for Education Jason Clare during Question Time at Parliament House in Canberra. Picture: NCA NewsWire / Martin Ollman

The Universities Accord Review offers a 408-page plan for a bigger and fairer higher education system. Its 47 recommendations would be hugely expensive if implemented in full, affecting millions of Australians as students and taxpayers. The government will need to reject or scale back some Accord proposals to make higher education reform affordable for both these overlapping constituencies.

The review’s biggest proposed expenditure item is a university degree attainment target of 55 per cent of Australians aged between 25 and 34 years, to be achieved by 2050. The report puts 2023 attainment at 45 per cent, but counting only people with Australian degrees attainment is lower, at 37 per cent.

If migration of people who already have degrees is reduced the report may underestimate how many additional domestic students are needed. But the figures it gives are already high. To reach the 55 per cent target the number of government-subsidised students, 860,000 in 2022, would need to hit 1.2 million in 2035 and 1.8m in 2050.

In 2022, the review’s base year, the government paid universities $7.2bn in tuition subsidies and lent students another $4.6bn through the HECS-HELP loan scheme. But Accord expenditure increases would be significantly larger than just increasing these dollar amounts by the same percentage as the enrolment increases. Other funding changes would drive up total spending.

The review recommends, rightly in my view, returning to the pre-2021 system of setting student charges according to expected graduate earnings. This would reverse the previous government’s Job-ready Graduates policy, which discounted student charges in courses the government favoured, especially nursing and teaching, while more than doubling them for most arts students.

An expected earnings approach would better integrate student charges with the HELP loan scheme, with the goals of keeping down average student debt repayment times and minimising bad debt. HELP repayments are based on income, so people with lower incomes take longer to clear their debt. Because arts graduates have relatively low salaries the large debts they accrue under Job-ready Graduates fees could take them decades to repay, if they ever do. Under the proposed Accord system, graduates with high average earnings, such as medicine, law and engineering, will have the largest debts. They are better placed than arts graduates to repay in full within a reasonable time.

But Job-ready Graduates set a booby trap for future governments. The current annual student charge for full-time teaching and nursing students is $4445 a year. This is half the price of the next-cheapest group of courses, and a just over a quarter of the $16,323 most arts students pay. A Budget neutral Job-ready Graduates fix would inevitably require lifting teaching and nursing student fees. The politics of that are not good. Keeping teaching and nursing fees down would add to reform costs.

Currently, total student funding rates – the tuition subsidy plus the student charge – vary between courses. It costs more to teach medicine than accounting, for example. The report suggests supplementary funding on student characteristics, especially indicators of disadvantage, assuming these students cost more to teach.

These cost differences need further investigation, a task for the Australian Tertiary Education Commission proposed by the review. Student characteristics-based funding is worth considering, but it would add to the system’s costs, especially as the report also sets ambitious enrolment targets for students from disadvantaged backgrounds.

To help these disadvantaged students, the review proposes making student income support easier to get and increasing fortnightly payments. Disadvantaged students using these programs complete their courses at higher rates than otherwise similar students, presumably because the extra money helps them study full-time and concentrate on their academic work. Enhancing student income support would bring benefits, but again adds expense.

While the review’s policy agenda would be prohibitively expensive if implemented in full, not all of it is convincing. Attainment targets reflect a speculative view of the future labour market, not the interests of people considering university in the coming years.

A 55 per cent target implies that everyone with an ATAR of 45 or over should go to university – ATAR ranks Year 12 students in percentiles according to their prior academic achievement. Historically most students with ATARs below 50 don’t go university. Those who do face a high risk of dropping out and if they finish a reduced chance of getting a well-paid job. Nobody should be encouraged to take courses that probably won’t leave them better off.

ATAR measures relative, not absolute, performance. With better school results a future 45 ATAR could signal higher academic achievement than a 45 ATAR does today. But tests such as NAPLAN show no such improvement is likely in the next decade.

The review’s recommendations to help students succeed are more firmly based on the best interests of students than a 55 per cent degree attainment target.

Andrew Norton is Professor in the Practice of Higher Education Policy at the ANU Centre for Social Research and Methods.