The Centre for the Study of Higher Education at the University of Melbourne has today published The fall and rise of postgraduate Commonwealth supported places, which I co-authored with Ren-Hao Xu. It is part of our research project on university decision-making under Job-ready Graduates, with other papers here and here.

As the title suggests, the paper shows how domestic postgraduate coursework places became increasingly full-fee before a reversal, so that now, for the first time since the 1990s, most places in public universities are Commonwealth supported. Additional flexibility in the use of CSPs introduced by Job-ready Graduates facilitated this growth.

This change saved postgraduate students significant amounts of money, but the scale of CSP provision looks fragile. We argue that it was partly a byproduct of excess capacity created by weak undergraduate demand in the post-lockdown years. As that demand returns pressure to move CSPs back to undergraduate courses will grow, compounded by tighter controls on CSP numbers in the ATEC era.

Financing domestic postgraduate coursework

With a few niche exceptions, all public university domestic undergraduates are in Commonwealth supported places (CSPs). But domestic postgraduate coursework – graduate certificate through to masters by coursework – has long been a mixed economy, with both Commonwealth supported and full-fee places on offer, sometimes in the same course. Full-fee students can use FEE-HELP to finance their studies.

Until Job-ready Graduates took effect in 2021, postgraduate CSPs were a ‘designated’ category, along with sub-bachelor places. Postgraduate CSPs were allocated to universities by funding cluster (groups of disciplines with the same Commonwealth contribution) in university-government funding agreements.

The spread of designated CSPs across postgraduate courses reflected historical allocations and ad hoc decisions on new places. These ad hoc allocations were not principle free – recurrent justifications included providing places for postgraduate initial professional entry courses and addressing skills shortages – but the cumulative consequences were untidy. University allocations of postgraduate CSPs ranged from dozens to thousands. This created messy local markets. Universities struggled to fill full-fee places when their competitors had CSPs.

Job-ready Graduates abolished specific allocations of postgraduate places, except in medicine. It put postgraduate coursework into a single fund with sub-bachelor and bachelor degree places. The Commonwealth contribution funding each university could receive for these places is their ‘maximum basic grant amount’ (MBGA).

From 2021, universities decided whether to use their CSPs in postgraduate courses. These decisions were not straightforward. A fixed maximum basic grant amount created a potential trade-off with undergraduate places. A second trade-off existed with full-fee postgraduate places, which usually generate significantly more revenue per place than a CSP.

Trends in postgraduate full-fee and Commonwealth supported places

Across the entire sector, including private higher education providers, domestic full-fee postgraduate places are just a majority, at 50.2% of all places.

But looking at public universities only, CSPs became a similarly narrow majority in 2021, the first year of Job-ready Graduates. The CSP share stood at 58% in 2024. The relative shares are back to where they were in the late 1990s, but with CSPs trending up rather than down.

How did this happen?

The politics of under-enrolment

As argued in one of our journal articles, the MBGA, while technically framed as a maximum, was seen by universities as a minimum. The government expected the money to be used, universities feared loss of funding if the MBGA went unspent, and universities that were over-enrolled – taking more students than supported by their MBGA – thought that unused grant amounts should be reallocated to them.

With a major post-COVID decline in undergraduate demand many universities struggled to enrol enough students to reach their MBGA. A continuity funding program ended up spending more than $1 billion on universities that did not reach their MBGAs, that were ‘under-enrolled’.

One strategy for minimising under-enrolment was to move CSPs to postgraduate courses. Some interviewees told us this and the CSHE paper looks at enrolment patterns for all public universities. All but six universities increased postgraduate CSPs in the JRG era to 2024, taking the postgraduate CSP share of all CSPs from 5.9% in 2019 to 8.4% in 2024 (2019 chosen as the comparison year due to other things happening in 2020 that make it an imperfect base).

The two universities with the largest increases in postgraduate CSPs as a percentage of all CSPs were chronically under-enrolled (every year 2021-2024), as were several others. For these universities weak undergraduate demand removed what might otherwise have been a trade-off between the qualification levels.

But some universities that never under-enrolled also took more postgraduate CSPs. Perhaps this was just enough to avoid being under-enrolled. But universities had other reasons to offer more postgraduate CSPs.

Mission reasons

Public policy historically favoured teaching and nursing for postgraduate CSPs, and universities in our interviews shared in this view. There was a general preference for social service occupations that did not lead to high salaries.

In 2019 the government allocated 47% of postgraduate CSPs to teaching and nursing. Despite the general growth in postgraduate CSP numbers their share of the pool in 2024 was, at 46%, hardly changed. 16,551 teaching and nursing places in 2019 became 23,121 places by 2024.

Especially in nursing, the CSP share of all postgraduate places increased significantly, from two thirds in 2019 to 88% in 2024. In education, the change was from 78% to 85% of all places.

Market competition

While most postgraduate coursework places remained in courses leading to social service occupations, other fields also saw growth in postgraduate CSPs.

In IT, postgraduate CSPs more than tripled between 2019 and 2024.

Local competitive dynamics help explain this growth. We give Melbourne and Brisbane examples where one university competed on price using CSPs in IT programs, forcing competitors to follow.

Postgraduate medical CSPs

Postgraduate medical CSPs were not in scope for our study, because they were unaffected by Job-ready Graduates. But in the broader story of the rise of postgraduate CSPs they are significant.

In an earlier post I reported that the headcount number of postgraduate medical initial professional entry students had more than doubled between 2015 and 2024, but this includes full-fee students.

In 2015 the university funding agreements allocated 3,532 initial professional entry medical postgraduate CSPs. In 2024 6,827 CSPs were delivered, a 93% increase.

Can postgraduate CSP enrolments be sustained?

In medicine, with a protected allocation, postgraduate CSPs are likely to be maintained unless ATEC forces a move to undergraduate.

But other postgraduate CSPs look more vulnerable. While mission and market factors helped boost numbers in the Job-ready Graduates era, the scale of growth relied on weak undergraduate demand freeing up CSPs. Undergraduate demand is now in a recovery phase, likely creating trade-offs between undergraduate and postgraduate CSPs at some universities.

At the same time, ATEC is pressuring high-demand universities to reduce their enrolments and has given universities with histories of under-enrolment no or below-inflation funding increases.

While there will be internal university pressure to maintain CSPs in education and health related courses, in other fields meeting undergraduate demand would plausibly be a higher priority than maintaining CSPs in markets with full-fee demand.