Category: Higher education finance

Please study at home

Andrew Norton6 Comments

The bill introduced last month to reduce the discounts for up-front payment of student contribution amounts or early repayment of HELP debts (discussed here and here) contains a previously unannounced policy: to stop Australian students getting tuition subsidies or HELP loans if their course of study is primarily at an overseas campus of an Australian university.

Peter Garrett’s second reading speech explained the rationale:

As students are only required to pay back their HECS-HELP debt if they file an Australian tax return, there is a higher risk that HECS-HELP debts incurred offshore will not be repaid, or not repaid for a longer period of time.

I’m not sure how big a problem this is in itself, but it is a sign that the government is concerned about HELP debt held by people not living in Australia. That the government makes no attempt to recover HELP debt from Australians working overseas is one clear design flaw in the income-contingent loan scheme.

It’s a flaw that has been exacerbated by other changes to law and policy. As dual citizenship has been permitted by Australia and other countries, the number of people with work rights in multiple countries has increased. More people can work overseas, and it would be very surprising if we did not see more people doing so.

The source countries of migration to Australia have also shifted towards the Asian countries in which Australian universities have their overseas campuses. According to the 2010 enrolment data, nearly 7% of domestic students speak an east or south-east Asian language at home (and probably more can speak one, but tend to speak English at home). A similar proportion were born in those countries. It would presumably be relatively easy for them to return to Asia to study at an Australian campus.

The flow of people between Australia and other countries is not a problem it itself. But it becomes a problem when it interacts with a debt recovery system designed for a less mobile world.

Enrolment share in deregulated higher ed markets

Andrew Norton2 Comments

With the supply of Commonwealth-supported places to be largely deregulated from next year for public universities, there is considerable anxiety at some institutions about how this will turn out. My theory is that a market without price signals will be bad for lower-prestige universities. But what about markets with price signals? The 2010 enrolment data can give us some guidance.

For domestic fee-paying students (mostly postgraduate coursework students), three university types have greater market share than they do for CSPs: the Group of Eight, the Australian Technology Network Universities, and the New Generation Regional Universities (groupings defined below, taken from the categorisations in this paper). Charles Sturt is very strong in postgraduates, helping to explain the strong showing of that group.

For international students, the Group of Eight and the ATN again have market share exceeding their CSP market share, with the New Generation Regionals having about the same share of internationals as CSPs. This is largely due to the entrepreneurial activities of Central Queensland University and the University of Ballarat, which are both highly competitive on price and recognising that students will not come to them, go to the students.

Clearly the Group of Eight and the ATN start in strong positions. But only two universities have less than 10% of their students from overseas, and there is lots of variation within broad university types. Mission and management can make a big difference.
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Teaching funding and teaching costs

Andrew Norton4 Comments

A new Universities Australia lobbying document released today (The Australian‘s report is here) contains some not previously publicly released information on university costs, based on information from six universities. The data is presented in a slightly confusing way, as UA have made the assumption that 25% of Commonwealth subsidies paid on a per student basis is for research, creating separate funding ‘gaps’ for teaching and research.

However, what it shows (if you get your calculator out) is that teaching-driven Commonwealth funding of $16,068 per average EFTSL and teaching-driven expenses of $16,151 per average EFTSL are pretty much in alignment. This helps explain why so many universities are significantly ‘over-enrolled’ – once the demand-driven funding system is fully operational they expect to at least break-even by avoiding research costs.

The funding ‘gap’ varies significantly between fields of study:

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The workforce supply of female graduates

Andrew Norton8 Comments

I’m writing a piece for The Age on the feminisation of Australia’s universities. In 2009, 59% of domestic commencing students were women. Overall the proportion of students who are female is a little lower, as there are strong male biases in education in some source countries for overseas students.

The gender shift in enrolments has big implications for the future labour supply of graduates. Though the 2006 census is getting a bit out of date, the figure below is striking. After their 20s, only a minority of female graduates work full-time except for age 50-54, when 51% are full-time workers. Obviously parenting responsibilities are a major factor in this, but even childless women are much less willing to work full-time than men.

I thought these numbers might offer some insight into the finances of the HELP loan scheme, but the ATO tax statistics don’t support this hypothesis.

Women owe 56.6% ofthe outstanding HELP debt, much what we would expect given their share of the student population. The average female balance of $12,361 in 2008-09 is lower than the average male balance of $13,914. I can think of a couple of possible reasons: the strong female majorities in cheap (to the student) courses such as education, nursing and arts; and a larger number of female than male graduates who have old unpaid debts, but at lower totals due to cheap HECS rates in the past.

If the gender age-work patterns persist, it does however raise questions about what happens if student contributions increase. Historically, the average repayment time for HECS/HELP debts is about 8 years. So on lower student contribution amounts, women who graduate in their early 20s could clear all or much of their debt by the time they leave full-time work to raise kids. But if initial debts are larger, that may not be the case.

Pragmatism and ‘fundamentalism’ on the funding of the humanities

Andrew Norton3 Comments

While clearing out my office earlier this month I found lots of old media clippings. Compared to the early 2000s, the higher ed debate now seems less ideological. I’m not sure exactly why, though the NTEU‘s lower profile in policy debate is probably part of it, along with the arrival of a Labor government, which attracts less heated opposition than a Coalition government.

But sometimes the old style of debate re-appears, as it did in this swipe at me in today’s Age for being a ‘market fundamentalist’, written by University of Melbourne English professor Ken Gelder.

He was responding to this article, which was a pragmatic analysis of higher education funding politics, based on a presentation I gave to a seminar on the public funding of the humanities and social sciences.

My argument was that given Australia’s political and economic arrangements the chances of significant increases in public funding for the humanities and social science were low. Smaller university English classes aren’t likely to win out as a spending priority against the many other pressing political demands. Labor and Liberal governments have behaved in quite similar ways on higher education funding, because whatever their ideological differences they face the same political imperatives. Read More »