By Marcia Devlin
The Australian federal government has proposed a budget package that is bad news for higher education. It proposes to: reduce commonwealth funding of programs by a blanket twenty percent and allow universities to charge fees (which they will have to do to make up for the government contribution reduction). Of the ‘profit’ universities make, that is, any portion above the twenty percent that is to be cut from commonwealth funding that universities might choose to charge, the proposal is that one-fifth of that must be set aside to fund scholarships for disadvantaged students.
Australia has the Higher Education Contribution Scheme (HECS) where students pay a proportion of the costs of their study. They can take out a loan with a marginal rate of interest and aren’t obliged to start paying it back until they reach an income threshold. The budget package also proposes to apply a real rate of interest to the HECS loans students take out to pay the now increased fees.
Modelling by Ben Phillips at the University of Canberra indicates that a female science graduate under a full fee scenario would pay off her degree in 13.9 years under the new arrangements, up from the current 8.4 years. Her total repayments will increase by an estimated $51,500: from $44,200 to $95,700. While they might still choose to go to university, forward thinking young female students will surely consider their university life plans in light of the proposed budget changes. Taking career breaks to have and raise children under the new loan interest rates will mean their debt increases significantly while they are out of the paid workforce, potentially creating lifelong and crippling debt. The estimated differences between male and female debt make for sobering reading: http://theconversation.com/hecs-upon-you-natsem-models-the-real-impact-of-higher-uni-fees-27808
Middle-class senior high school students are concerned but optimistic that a political compromise might be found. However, the proposed changes will simply rule out going to university for many mature age students, particularly those in country areas. While many of my university’s potential students are ambitious and aspirational, they are concerned about forgone income and finances while a student, particularly when they have family responsibilities.
In response to these concerns, universities like mine that are located in country areas have promoted the financial support available from Commonwealth Scholarships (now gone in the package) and Start-Up Scholarships (now converted to a loan). Given our limited capacity to spike our fees to create ‘profit’ (we would price ourselves out of the country market), we will be unable to create the scholarships the government has mandated. Until now, we would answer potential student queries about their HECS debt with reassurances that the debt can be paid off slowly over a period of time with little penalty. We cannot now provide the same assurances to our potential students.
While some of the elite universities are pleased with the fee deregulation component, there is yet to be a single voice applauding the budget package as a whole. Many in the sector and wider community are hoping for a Senate block and some subsequent reconsideration leading to the removal or toning down of some package elements, particularly the loan interest rate.
SRHE Fellow Professor Marcia Devlin is the mother of two senior high school students and the Deputy Vice Chancellor (Learning and Quality) at Federation University Australia.