Funding Higher Education in Australia

A new report published by the Grattan Institute, written by Andrew Norton, titled “Graduate Winners”, proposes that:

Most students should pay more for higher education, given how
much they benefit from a degree. By the middle of this decade,
tuition subsidies will cost taxpayers around $7 billion. Yet it is not
clear why the public should pay. It is time for a new approach.

Australian higher education costs are subsidized by the government, with the subsidy amount varying by discipline. In this report, Mr. Norton runs the numbers and demonstrates that there are cases where the public benefit outweighs these subsidy costs and other cases where they do not. His proposal would, over a phase-in period, save about $3 billion annually, with those costs being borne by students generally in the form of loans.

Mr. Norton makes the case that most students would not be dissuaded from pursuing their higher education by these additional costs. This is contrary to what is being observed in the England. In a report from the Independent Commission on Fees just published, total university applicants numbers have dropped by nearly 9% – 37,000 fewer applicants – in the first year of higher fees. While some of the decline in applicants can be explained by declining numbers of college-age youth in the population, it seems clear that rising costs are a significant factor.

Andrew Trounson, writing in The Australian, argues that “The HECS system could ‘break’ if student fees rise too high as a result of cuts to government subsidies…”. As prospective students weigh the pros and cons, as they see their loans stretch out before them for fifteen to twenty years and begin to impact other life activities such as home purchases, the value of higher education may lose some of its luster.

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