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Fee deregulation (mostly) gone; other Higher Ed changes and fee increases considered in new paper

3 May 2016

The Turnbull Coalition government has largely scrapped its current plans for fee deregulation, in a 2016 Federal Budget that instead canvasses big potential changes in a new paper.

The new government paper, “Driving innovation, fairness and excellence in Australian higher education”, proposes considering everything from partial deregulation to higher student fees.

Changes, including an increase in student fees, form part of that paper. The paper will be subject to further consultation, and changes will not commence until 1 January 2018.

Legislation to have students pay an extra 20% of their fees will not be withdrawn, but will be delayed “to provide certainty pending the passage of legislation”. Other changes could see new partial fee deregulation.

What’s being proposed as a potential in the paper

It must be emphasised that most of the parts of this paper are potential proposals. While the government has floated them as ideas for discussion and debate, it has not endorsed most of them, and has not necessarily stated whether it thinks they are the right idea.

Student fees go up by 20%: The government in 2014 proposed changing the funding of Commonwealth Support Places (CSP) from 40% student/60% government to 60% student/40% government. This is again proposed in the government’s paper and remains on the table. Another 50%/50% option was also floated.

Loan fees on student loans considered: The government argues that Australia’s HELP (student loan) arrangements are “one of the most generous income-contingent student loan schemes in the world”. The government has floated several proposals on loan fees, one of which would see all HELP loan fees abolished. The other two would see the government make some profit (under a 5% loan fee) and a major profit (under a 20% loan fee).

Students repay their student loans faster: The government is proposing potentially dropping repayment thresholds of HELP – the amount at which people need to earn to repay their debts. This could be from the currently $54,126 to for example $40,000 a year. It is also considering a higher repayment rate for high income earners (over $100,000). It is further considering changes which would see the inflation rate considered for students be increased.

“Flagship courses” see partial deregulation: While the government has largely scrapped fee deregulation, it has proposed a new idea called “Flagship courses”. The government says this would provide universities “flexibility to innovate” and give them the option “to attract additional revenue in courses where they have developed particular expertise”. Under this move, universities would be allowed to introduce these courses for “a small cohort of their students” – and these courses would have fully deregulated fees. The government proposes a figure of 20 per cent as the potential “small cohort” number. The government says such courses could be monitored by an organisation such as the ACCC and would have some kind of cap.

Commonwealth supported places for private institutions: The government remains committed to increase commonwealth support funding for sub-bachelor courses by private providers, such as ones that provide diplomas and associate degrees. Such an option is one that the government has provided for potential consideration in its paper.

Student supported places limited over a lifetime: One major proposal being floated is a “time-limited learning entitlement” – a situation where students receive funding for a set amount of years for life. The government has floated the figure of seven years as an example. That means that after undertaking seven years of funding, students can no longer access government support.

Postgraduate funding reconsidered: The government says that there is an inconsistent approach to allocation postgraduate places, and which received subsidised places and which do not. It proposes considering a reallocation of places, a targeting of Commonwealth support for “courses identified as delivering significant community benefit”. The government is considering demand driven funding for all postgraduate courses.

Funding clusters reconsidered: Current fees and funding arrangements on an undergraduate level are done through clusters, which group subjects into category. The government says it will consider generally reviewing them.

Infrastructure reconsidered: The government says it will consider introducing “a new infrastructure fund or loan facility” for regional and outer metropolitan universities to build infrastructure. Favourite Turnbullesque buzzwords, such as “collaboration”, “new technologies” and “transformative” make a mention. The government also says it needs to consider what kind of infrastructure should be prioritised.

New tact, but government still committed to limiting its contributions

The government is standing by the merits of its original proposals. “As part of the 2014-5 Budget, the Government announced an ambitious package of higher education reforms,” they say in their paper. The further write that it had the support of most peak bodies, university vice-chancellors and twice passed the House of Representatives.

Barely any mention is made of the opposition to the moves, including the student protests that drove a part of that over several years. But in the paper, the government does acknowledge “community concerns about the perceived cost of potential higher education fees and evidence about the possible impact on student loans”.

“Our paper, ‘Driving innovation, fairness and excellence in Australian higher education’, will ensure there is a reasoned and evidence-driven discussion on higher education reform, without full university fee deregulation,” said the government’s education ministers in a joint press release.

But in their press release, the government’s education ministers said that “The costs to taxpayer of higher education, have, over recent years, grown dramatically”.

“Funding of university students has, essentially, grown at twice the rate of the economy,” they said.

The government says that this growth needs to be limited to an extent. “Ensuring [the HELP system] remains financially sustainable and affordable into the future must be a key object of reform,” they argue.

This is expected to continue to occupy a large amount of the time of the Department of Education and Training. The Department will have as one of its key priorities for the year “continuing to support the Government to build a strong case for higher education reform”.

Higher Education Participation

The government will undertake big cuts to the Higher Education Participation Program, cutting $152.2 million over four years. It will continue to fund the program by $553.2 million.

The program provides grant funding to initiatives that increase participation in universities and higher education. At the University of Melbourne, it once provided some funding for the Student Union’s VCE Summer School programme.

But the government says the program is underperforming, particularly in the area of Indigenous, rural and regional students. It says that despite the move to a demand driven system (where universities could enrol as many students as they like) over the last few years, and HEPP, numbers are still unacceptably low. It says it will evaluate HEPP in general.

Changes in the budget

Overall funding: The government has announced a $12.3 billion increase in funding for higher education, representing a 0.9 per cent increase. But large long term government contribution cuts remain.

TEQSA boosted: It will specifically increase the budget for the Tertiary Education Quality and Standards Agency, the regulator of higher education teaching standards, by $10.1 million over four years. Supporting TEQSA makes a prominent appearance in its paper.

QILT boosted: The government will additionally undertake changes to the IT infrastructure for QILT, a set of higher education surveys and benchmarks, such as the Graduate Outcomes Survey, providing an additional $8.1 million in funding. Ideas for QILT that the government has proposed include a course finder app and integration with real ATO and earnings data in QILT data.

PELT cut: But the government will cut $20.9 million over four years from the Promotion of Excellence in Learning and Teaching in Higher Education.

International education boosted: It will also provide $12 million over four years for a new “National Strategy for International Education”, which it says “will strengthen Australia’s position as a world leader in this sector”.

Indigenous education boosted: The government will increase the funding of the Australian Institute of Aboriginal and Torres Strait Islander Studies by $40 million over four years, to support cultural and heritage collections.


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