It’s 6:04pm and an email drops into our inbox and SURPRISE it’s a media statement from Simon Birmingham, the Minister for Education. The 2017 federal Budget isn’t due to be released til next week, but the government’s reform of higher education has just dropped.
After 11 paragraphs of waffle about “driving better outcomes” and getting “value for money for taxpayers” *yawn* Birmingham announces three reforms to higher education i.e. your uni degree: better support for students, greater transparency and accountability, and a fairer deal for taxpayers. 3 bland phrases that have a positive vibe, but say nothing at all. We dug through another 10 paragraphs of govspeak, and went through the accompanying 35 page document detailing the government’s higher education policy, and finally found the big changes that will affect you.
The main changes are a 7.5% increase in student fees, a significantly lower income threshold for repaying HECS debt. On the bright side fee deregulation is totally gone, and government funding will be partly dependent on universities meeting new KPIs, starting with cooperation on the admissions process. The new efficiency dividend and the increase to student contributions will save the government $2.8 billion over the next 4 years.
In a statement to Pelican, UWA expressed concern “that the changes to the student contribution and the threshold at which they begin to repay their HELP Fee debt may discourage some students from attending university.” They also noted that “there are fundamental difficulties with the current funding model with universities relying on the fee-paying international student market, and external support and philanthropy to help pay for domestic teaching and research” and note that the Government’s proposed changes do not address these issues. Nevin Jayawardena, 2017 President of the UWA Student Guild, also expressed concern that the Liberal Government continue[s] to attack funding to higher education which would see university fees increase and burden students with a greater debt which they will struggle pay off,”.
Changes to Student’s University Fees
Increases to university fees
From 1 January 2018 the government will begin ‘phasing in’ an increase to the maximum student contribution (aka your uni fees/HECS debt). The increase will be 1.8% every year, until 2021, and cumulate to a total increase of 7.5%. This will affect all current and future students.
Using this fun calculator on UWA’s website we crunched some numbers and calculated what this increase will mean for the average student. For an undergraduate science student at UWA whose units have an average student contribution of $8,500 a year, or a total of $25,000 for a 3 year degree, this will increase the annual cost to $9,137.50, and the total cost of a degree to $27,412.50. That’s about $2400 higher. Add a year of honours, and a postgraduate Medicine degree, and you’re looking at a total cost of $73,100 for 8 years of study, compared to the current total of $68,000. That’s $5,100 higher.
Changes to the share of student contributions.
From next year the share of university fees paid by students (the student contribution) will rise from 42% to 46%. The corresponding share paid by the government/taxpayers will fall from 58% to 54%. In short: the government spends less, and students pay more.
Repaying HECS Debt – lower threshold
From July 2018 the income threshold for repaying HECS debt will be lowered to $42,000 (and repayments starting at 1%). At the moment the threshold is $55,000. For comparison, the minimum wage is currently $35,000. The ATO estimates that the lower threshold will force an additional 183,000 people into repayments.
The threshold will now be linked to the Consumer Price Index(CPI, aka inflation), instead of the Average Weekly Earnings (AWE). CPI typically rises slower than AWE, meaning that the threshold will remain lower for longer, and more people will be required to repay their HECS debts. These are the first major changes to the HECS repayment system in over a decade, and the third major change since the loan scheme was introduced in 1989. This will affect everyone with a current HECS debt.
Confirmed – no fee deregulation
The disastrously unpopular policy of fee deregulation has been completely abandoned. Fee deregulation was first suggested in 2014. In this announcement the government has confirmed that no student contribution will increase by more than $3,600 a year.
Changes to University funding
Teaching subsidies cut by 2.5%
Under the guise of an ‘efficiency dividend’ $2.8 billion will be cut from university funding in the 2018 and 2019. 2.5% of all subsidies for teaching costs will be taken. The justification for the 2.5% cut: since the cap on university places was removed in 2009, universities have been earning more money (getting more students) but spending less money on running those courses. UWA currently receives $333.6million in subsidies, this would reduce to $324.4million. UWA has confirmed that the proposed efficiency dividend will effect their budget by about $8 million. For context: the government had previously been talking of an 20% cut in overall funding – a measure that was widely criticised by the industry.
Portion of funding linked to KPIs
From 1 January 2018, 7.5% of a university’s Commonwealth Grant Scheme cluster funding will be withheld unless a university meets various requirements (KPIs) that the government decides on, such as student satisfaction. In 2018 the requirement is that universities participate in the reform of admissions information and cost of teaching and research transparency initiatives. From 2019 funding will also be linked to ‘institutional performance metrics’ (those metrics are tbc).
Support for students
Funding for Regional Study Hubs
$15million to establish and maintain 8 regional study hubs. These hubs would target regional students who want to have courses delivered locally from any university, and who need to remain in their local area. The hubs will be modelled off the 2 current regional hubs (Geraldton and Cooma). One new hub will be located in the Pilbara.
Conclusion
The government is sticking to its message that universities are overfunded. Previously unpopular policies of fee deregulation and 20% cuts in funding have been abandoned in favour of a focus on increasing student contributions and repayments. There is also a push for universities to become more transparent and accountable, and the government will enforce this by linking part of a university’s funding with performance metrics. Universities and Students are not impressed.
Words by Ruth Thomas, art by Harry Peter Sanderson
Edit 2 May: Pelican reached out to Guild President Nevin Jayawardena, and UWA Vice-Chancellor Dawn Freshwater for comment – their responses have been added to the article. You can read their full responses here and here.
You can read Simon Birmingham’s full media statement here, and the government’s full policy statement here.