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Higher education reforms: an explainer

2 May 2017

The Turnbull government has released a series of higher education reforms that will increase the cost of going to university and save up to $2.8 billion dollars in the Budget.

Speaking on Monday night, Minister for Education and Training Simon Birmingham introduced the policies which, if the Senate approves, will come into effect in 2018.

While they’re not quite the 25% cuts feared by some, these policies are attracting criticism for unfairly impacting students.

Here’s what’s what:

Fees for subjects will increase each year, beginning in 2018 and ending in 2021, for a total increase of 7.5%. The Department of Education and Training estimates that the total increase will be between $2,000 and $3,600 for a four-year course during this period.

The government will also perform a 2.5% “efficiency dividend” on Government subsidies to universities over the next two years. This means that, by the end of 2019, the Government will pay 2.5% less to universities—in other words, a cut. Media estimates have put that number at about $380 million dollars.

Students will have to take on a higher proportion of spending, with the share of a degree paid by students rising from 42% to 46%, and the share paid by the taxpayer falling from 58% to 54%.

The repayment threshold—the yearly income above which students have to start paying back their HELP debt—will be reduced, from $54,874 to $42,000. Students making exactly $42,000 will have to pay back 1% per annum, which will gradually scale up to an annual income of $119,882, when students will have to pay back 10% per annum.

The repayment threshold will also be increased in a different way from July 2019, with yearly increases tied to inflation rather than the average rate of wage growth. As wages have been growing slower than inflation, this means that it will become easier to earn above the threshold.

Universities will have to meet ‘performance requirements’ to continue receiving some funding from 2019. What these requirements will specifically be is not yet known, but would centre around admissions and financial transparency, with student retention and success requirements being introduced later.

And both New Zealand citizens and permanent residents will no longer be treated as domestic students and will have to pay a full international student fee to go to an Australian university. However, to compensate, the Government is proposing allowing New Zealand citizens and permanent residents to take out non-subsidised FEE-HELP loans to cover those fees.

The Government has also announced plans to fund eight ‘regional study hubs’, as well as plans to allow sub-bachelor diplomas, advanced diplomas and other courses to offer government subsidised places. Understandably, it’s the range of cuts and added pressures on students that are receiving the most attention.