In the 2026 university funding agreements the rules on closing courses have changed and now require universities to follow additional processes. These changes are presumably a response to course and subject closures at UTS, at Macquarie, the ANU, the University of Canberra, and other institutions.

Confusingly, however, the agreements differ between universities on the timelines to follow.

Which courses are covered?

The basic threshold for a course being covered by the closure rules is that it must be an undergraduate or postgraduate course in which Commonwealth supported places have been used for at least two years. This includes a major within a course.

A course is not considered closed if it is immediately replaced by another course that leads to the same occupation or provides a similar specialised skill.

A course is considered closed, however, if it suspends intake of students for more than one consecutive academic year.

These criteria are unchanged from last year.

Timing of notification

In 2025 universities had to notify the Commonwealth of potential course closures by 31 July and before information on the closure is made public.

In 2026 the 31 July deadline is gone. Presumably it was unrealistic about university decision making timelines.

In what I will call funding agreement variation A, for 2026 notification of actual or potential course closures should occur at the earlier of (i) as soon as reasonably possible before final decisions to close courses are made or (ii) before any information on the potential course closure is made public.

In what I will call funding agreement variation B, for 2026 notification of potential course closures should occur by the earlier of (i) the finalisation of the provider’s Mission Based Compact for the following year (or where a new Mission Based Compact is not being negotiated, the finalisation of annual allocation of domestic student places for the following year), or (ii) one calendar month before any information on the potential course closure is made public.

Variation B is a bold inclusion, as the ‘annual allocation of domestic student places’ refers to a new funding system that requires legislation. As of early February 2026 it had not been introduced into Parliament, much less passed.

For variation B universities, then, the effective current rule is to notify the Commonwealth at least one month prior to making a course closure public. Variation A universities can wait until closer to the date of public disclosure before telling the government, unless they have made a final decision, as they need to inform the government as soon as possible before that decision.

What information universities need to provide

In the 2025 process, universities wanting to close a course had to fill in a form with a heading ‘reasons for closure’. This focused attention on courses related to skills shortages, courses funded under Commonwealth ad hoc programs (e.g. equity places, nuclear submarine places), or courses in areas of national priority, with education, nursing, allied health, IT and engineering given as examples.

The implication was that course closures not in these areas would be routinely approved. For courses in these areas the form had prompts for required information. These focused on identifying the effects of the course/major closure and how the provider would ‘address’ these matters.

In the new process, which is the same for variation A and B funding agreements other than the notification rules, the university must provide a ‘justification’ for each course closure.

The university must state what consultation has been undertaken with ‘staff, students, the community and other stakeholders’. The implication is that such consultation should occur. But if the university consults it de facto announces a potential closure. Internal ‘stakeholders’ oppose cuts with public campaigns. Universities can consult, or they can notify the Department prior to a public announcement, but they cannot do both.

The university has to report the ‘expected high-level impacts on staff and students’, including the numbers of students and staff affected.

The university has to state the alternative options for students if the course is in a priority area, with education, nursing, allied health, IT and engineering given as examples, as in 2025.

The university must also say whether the courses enrol students under the ad hoc places programs.

The university has to say whether the course is the sole or dominant provider of the ‘national skill basis for that occupation’.

Broader 2025 requirements to report on how the university will manage skill shortages where they are not a dominant provider, or whether there may be regional skills issues, no longer appear in 2026 as matters to be notified. But these skills issues re-appear in the list of matters the Commonwealth will consider. Does this mean the onus is now on the Commonwealth to identify them? It probably should be, but pragmatically universities should address matters that influence Commonwealth decision making in their original notification.

Teach out

The university has to state how the provider is meeting relevant requirements under the TEQSA-administered Threshold Standards, including proposed teach-out provisions so existing students can complete their course. The 2025 rules just referred to teach out provisions.

I might have missed something, but I can’t see that the Threshold Standards specifically cover teach outs other than students being given ‘reasonable notice’ of changes to higher education provider operations that may affect the ability of students participate in their course (section 7.2.4). Universities have detailed policies on course closures. But all the relevant Threshold Standards apply while a course is being taught, whether it is being phased out or not.

The Commonwealth’s decision

If the Commonwealth has concerns it will consider student demand, course financial viability, and the justification for the closure. This is the same as in 2025.

The 2026 version, however, has an emphasis on skill shortages – as noted, the movement of this issue from the notification section to the decision making section of the funding agreement course closure provisions.

Options for the Commonwealth include exploring options for the university to cooperate with another provider in offering the course, including moving Commonwealth supported places to the other provider.

In both 2025 and 2026 the funding agreements state, with more words than seem necessary, that ‘the Commonwealth will not unreasonably require the continuation of the course if it would place an unreasonable financial burden on the Provider or place the Provider in a financially unviable position with regard to the Provider’s overall financial status.’

This seems to mean that loss-making universities will be given more scope to close courses than universities with surpluses. Of course universities with deficits are the most likely to cut courses, as universities usually avoid hard decisions unless forced into them by financial pressures.

Course closures and funding policy

The government wants to manage the policy and political implications of course closures, but policies it inherited and shows no signs of changing impliedly encourage this practice.

Cost studies find that, unsurprisingly, higher education is an economies of scale industry – especially in spreading fixed or semi-fixed costs over larger numbers of students.

When Job-ready Graduates reworked total funding rates to ‘better align funding with the average cost of delivery’ the average reflected the economies of scale of larger universities in each field, making it harder for smaller universities to keep costs within funding. Funding based on average costs also reduced ‘profit’ margins on financially viable courses and subjects. This reduced surpluses that could support subjects and courses the university offers for mission reasons, but which do not fully cover their own costs.

The logic of the JRG funding system is to encourage or force consolidation around courses and subjects with financially viable enrolments and to close others. And that is what we are seeing.

The ATEC bill is confusing on ATEC’s funding responsibilties, but its reference to ‘efficient cost’ suggests a similar intellectual approach to JRG.

Conclusion

I’m not a fan of the ATEC bill, but if ATEC is established one thing it should do for its state of the system report is in-depth analysis of where we stand by discipline and by pipeline into occupations. That would provide a much stronger analytical base for decisions about the implications of course closures.