Universities will be doing more for less for the foreseeable future

Universities are waiting for federal Education Minister Dan Tehan to drop the other shoe.

There’s no feeling like waiting with trepidation for the other shoe to drop. So far this year universities have suffered through the devastation of their international student business. But overseas students are just a third of total student numbers. The rest are domestic students and their plight is the other shoe.

The story goes back to the end of 2017 when the money universities receive for domestic students doing government-subsidised courses (bachelor degrees and some coursework master degrees) was frozen by the Turnbull government. From this year onwards it returns to growth, but only marginally. It is now indexed to the size of the Australian population aged between 18 and 64.

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That wouldn’t be such a problem if the number of students going to university was stable.

But consider what is expected to happen next year. In these times of COVID, as in every economic downturn, more people want to study. Universities and university admission centres are already reporting much higher numbers of inquiries and applications. For example, those in the Year 12 class of 2020 who planned to get a job next year but think it will be tough are likely to decide to try out for university. Students who otherwise would have chosen a gap year overseas also will be thinking of going to university instead. And older people already in the workforce who’ve lost their job will be thinking about university study.

This means we can expect a boom in commencing students at university next year. But, on current Morrison government policy, the amount of money to pay for these students will not be going up, except for a tiny incremental rise based on population growth.

This looming problem is why there is great interest in Education Minister Dan Tehan’s address to the National Press Club this Friday. The funding gap that is looming for domestic university students is more than just the elephant in the room, it’s the beached whale — enormous, not easy to deal with and completely impossible to ignore.

So the minister has to talk about it. But the government — facing the largest budget deficit in Australia’s history — does not want to spend more on universities. So what happens?

My feeling is that if there is any extra money, it will be a small amount and nowhere near enough to pay for the new students who want to go to university next year.

I also have a feeling I know what Tehan will say in his speech. I expect he’ll thank universities fulsomely for their response to his short online courses initiative.

What does that have to do with student funding? A lot.

The six-month short courses, at both undergraduate and postgraduate level, were rolled out rapidly in response to COVID. Universities are offering 329 of them at cheap prices mandated by the government. They get far less revenue from the short courses than regular bachelor or master degrees that are commonwealth-funded.

For example, for teaching degrees universities usually get nearly $18,000 a year per student from both government subsidies and student HECS fees. For an equivalent short online course the university gets about $13,700 (in annual terms). Some vice-chancellors say the short courses are losing them money and they’re offering them only because it’s the right thing to do for the nation.

But the clincher is that universities have now demonstrated they can deliver degree-level courses in education, nursing, engineering, science, IT and other fields while receiving much lower revenue.

Admittedly the courses are online, not face-to-face, and there’s no expensive laboratory component. But, nevertheless, universities have shown themselves willing and able to be paid much less to teach degree courses.

The government will want to hold them to that. It’s going to be a heavy shoe to bear.