Category: Higher education finance

Mapping Australian higher education 2023 – official release

Andrew Norton2 Comments

Update 20/12/2025: More recent data here.

Mapping Australian higher education 2023 is now available from the ANU Centre for Social Research and Methods website.

Update 30/10/2024: There is a later version of Mapping 2023’s data here.

Update 26/10/23: A reader has pointed out that list of FEE-HELP NUHEPs is incomplete. A column of names from the original Excel file was omitted during production. The full list is available here. This list also includes three non-FEE-HELP providers registered by TEQSA since the pdf version was finalised. A corrected version of Mapping with the full list of NUHEPs, as of mid-2023, is here.

If anyone has noticed other errors please let me know.

Should funding be partly based on student characteristics?

Andrew Norton3 Comments

Australia’s higher education teaching funding system is primarily based on subjects rather than students. Subjects taken are converted into ‘equivalent full-time student load’ (EFTSL), the amount of study a full-time student does in an academic year. The funding rate per EFTSL varies by field of education, assuming that subject characteristics drive costs.

Various supplementary programs calculate funding on headcount equity students, but with trivial resources compared to the subject-driven funding programs, the Commonwealth Grant Scheme and HELP.

Funding on headcount?

One interesting idea in submissions to the Universities Accord review, especially suggested by regional universities, was to base more funding on the student. For part-time study one EFTSL could be two or more individual students. While their combined classroom time matches one full-time student, a student with 50 per cent of an EFTSL could put similar or even greater demands on other university services as a student at 100 per cent of an EFTSL.

In RUN’s submission they report a member university’s finding that, on average, their part-time students utilised eleven services compared to five for full-time students.

Older students are more likely to enrol part-time (chart below). Given the high rates of upper ATAR students going to university soon after school older first-time students must disproportionately be people with weaker school results. They plausibly have above-average needs for academic support to complete their courses successfully.

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How would student places be allocated under the Universities Accord?

Andrew Norton1 Comment

The task of interpreting the Universities Accord interim report is like that of a biblical scholar trying to extract meaning from fragmentary and sometimes contradictory texts. But building on my post on a universal learning entitlement, in this post I try to understand what kind of student places allocative system the report proposes.

Existing and possible Accord allocative systems

All funding systems need methods for determining total resources and then allocating them between institutions, courses and students. The chart below has the three allocative models currently in use – what I call technocratic, block grant, and demand driven – and the Accord model, which on my reading has elements of the technocratic and demand driven models. However these models are in tension with each other – technocracy puts experts in charge while demand driven funding is based on decentralised decision making.

DecisionTechnocratic (current system for medical students)Block grant (current system for most students)Demand driven (current system for bachelor degree regional Indigenous students with likely extension to all Indigenous students)Accord model?
Total number of places/dollars for each year (system level)Government decisionGovernment decisionUniversity and student decision. Aggregate outcome of student decisions (especially if universities have less control over who they admit).
Or aggregate of Tertiary Education Commission university allocations.
Total number of places /dollars for each universityGovernment decisionGovernment decisionUniversity and student decision.Aggregate of student decisions with full learning entitlement model, possible voucher system.
Or as negotiated/allocated by the Tertiary Education Commission.
Total number of places/dollars for each course or disciplineGovernment decisionUniversity and student decision.University and student decision.Target allocations for courses determined by Tertiary Education Commission.
Possible caps via aggregate voucher allocations/university-level enrolment caps on low priority courses.
Student-level allocative criteria, such as academic results or equity group status.Can be a government decision, but for medical students a university and student decision.University and student decision.University and student decision.Possibly a government decision through Tertiary Education Commission/national admission centre. Or keep current system but use targets to push unis to enrol more students, in general and from priority groups.
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The Universities Accord universal learning entitlement – how might it work?

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One Universities Accord interim report suggestion is a ‘universal learning entitlement’. But what would this mean, and how would it differ from what we have now?

The first part of this entitlement is to support Australians in obtaining a tertiary qualification. But it aims to go beyond ‘traditional targets’, such as for higher education or VET, to meet ‘a range of skills and other objectives’.

The interim report defines entitlement funding as ‘an appropriate combination of a public subsidy, a student contribution that would be paid through an income contingent loan … and, for some lifelong learning, an appropriate employer contribution’.

Current limits on higher education enrolments

While no Australian citizen is specifically disqualified from accessing a funded place in higher education, in practice three admissions-related obstacles can stand in their way.

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For universities the Accord interim report proposes a more extreme version of Job-Ready Graduates

Andrew Norton6 Comments

The Australian Universities Accord interim report recommends overturning the most controversial Job-ready Graduates policy, using student contribution price signals to guide student course choices.

But overall the Accord interim report and Job-ready Graduates have strong parallels. They both take a utilitarian view of higher education, that its purpose is to provide benefits to others rather than being of any intrinsic value. Universities exist to meet skills needs, find practical uses for research, contribute to their local communities, and promote equity. The main difference is the interim report proposals are, with student contributions the main exception, more extreme and interventionist than Job-ready Graduates.

Substantially reduced university autonomy

Historically universities in Australia and other western countries have operated with a significant degree of autonomy from government. But despite using the word ‘autonomy’ a few times the Accord interim report shows little interest in this idea.

On my count at least 25 interim report proposals would reduce the scope of university-level decision making or are new reporting requirements that set universities up for future regulation. In my list these cover general mission direction, student admissions, the mix of disciplines and courses, curriculum and teaching, use of funds, and accountability.

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The decline of the humanities

Andrew Norton4 Comments

A couple of days ago the Sydney Morning Herald published an article on falling enrolments in university humanities subjects, with a focus on history and English.

I’ve converted the data into an index to make it easier to see the trends in fields with different absolute numbers of full-time equivalent enrolments. In the late 2000s and early 2010s the humanities shared in general enrolment growth, but after that went into decline. History’s growth and decline were greater than the humanities in general.

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Free higher education as income and consumption smoothing

Andrew Norton2 Comments

The argument that free higher education would create additional higher education opportunities is empirically weak. History and international comparisons show that participation rates increase without it, and indeed due to budget constraints free higher education can lead to lower participation rates.

However there is another argument for free higher education which, while still contentious, has goals and likely outcomes that are consistent with each other.

Free higher education and income/consumption smoothing

The strongest argument for free (or cheaper) higher education is a better balancing of income and consumption over the life cycle. Needs are more consistent through life than income. Most people consume more than they earn when young and old and a large proportion earn more than they consume during their full-time working years. Smoothing these out is one of the principal functions of welfare states.

Compared to upfront fees or mortgage style student loans paid in instalments the HELP repayment system already has strong smoothing effects. It pushes the expense of higher education away from the years when full-time study limits scope for paid work. On low incomes no HELP repayment is required or repayments that are less than the minimum likely mortgage style loan repayment amount. On high incomes HELP repayments are more than the likely mortgage style loan repayment amount.

And higher education is already free for HELP debtors who persistently earn less than the first repayment threshold.

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Would free university increase or decrease higher education participation rates in Australia?

Andrew Norton5 Comments

In a previous post I argued that Australia’s practice of charging fees for higher education reflects its broader patterns of taxation and public funding of social services.

But we have had free higher education before, 1974-1988. For a government already spending over $600 billion a year the cost of free higher education is not beyond the feasible range. I estimate costs at $4.6 to $5.9 billion a year on status quo numbers of student places in public universities. The range reflects uncertainties about how domestic students currently paying full fees would be handled. The $4.6 billion transitions currently Commonwealth supported students to free, while the $5.9 billion fully compensates universities for lost fee revenue.

Of the arguments for free higher education the one that people find most intuitive is that it would increase higher education participation. People consume more when prices go down. But somebody is paying – the government on behalf of taxpayers – and so how they would respond is the key variable in whether the number of students would go up or down.

Debt aversion

Supporters of free higher education often make demand-side arguments, that fees or loans are a deterrent to higher education participation, especially to people from disadvantaged backgrounds.

As someone with working class origins free higher education advocate Duncan Maskell says he would not have gone to university if he had to take out a loan. Occasional school student surveys have picked up similar sentiments. But the ‘debt aversion’ hypothesis has always had trouble distinguishing between sensible prudence around taking out debt that probably is not worth it (good debt aversion), and over-caution in taking out debts that would probably lead to significant long-term benefits (bad debt aversion).

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Why do Australian university students pay fees?

Andrew Norton2 Comments

University of Melbourne VC Duncan Maskell secured some not always entirely positive media coverage today for his call to make university education free for domestic students.

University education is free or very cheap for students in some European countries and was also free in Australia between 1974 and 1988.

Why do countries differ on university fees?

My theory of why countries differ on this issue draws loosely on the work of Julian Garritzmann. We observe broad coherence between higher education finance systems in each country and their overall tax and social service/benefits systems. The chart below shows patterns in the OECD. Australia is in a cluster of countries in our region with government expenditure below 40 per cent of GDP and quite similar fees in $USD purchasing power parity terms. The countries with free higher education tend to have governments that consume more than 50 per cent of GDP.

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Are mini-demand driven systems a good idea?

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In their second submissions to the Universities Accord review Universities Australia and Innovative Research Universities both call for extending the existing demand driven system for regional and remote Indigenous students to all Indigenous students.

Mini-demand driven systems support increasing enrolments from a target population, or potentially in a target course, without risking (from a government perspective) a major cost escalation under a full demand driven system.

Although I support a return to full demand driven funding I doubt that mini-demand driven systems are a good idea.

The risks of restricted-use funds

From a government perspective the attraction of mini-demand driven systems is their apparent pursuit of some desirable outcome at low cost. Only funding for the estimated additional student places is likely to be ‘new’ money.

If so, in the transition to a new mini-demand driven system each university would lose from its overall maximum block grant amount estimated funding for current students meeting the mini-demand driven criteria – in the UA/IRU case, probably the Commonwealth contribution value of their existing student load of Indigenous students living in metropolitan areas.

As a result, ‘old’ money that could once be used flexibly for any domestic student could after the clawback only be used for about four per cent of the population.

If in practice the university attracts fewer Indigenous students than expected, or these students enrol in subjects valued at less in Commonwealth contribution terms than forecast, then the university is left with stranded resources. It has student funding that is theoretically available but in practice cannot be used.

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