Unknown costs a challenge for the class of 2014

As universities around the country hold Open Days, and closing dates for applications for 2015 entry loom, spare a thought for this year’s crop of Year 12 students. Not only do they have the usual challenges of deciding what course they want to do, and considering what Australian Tertiary Admissions Rank (ATAR) they might get, they also have no idea how much a university course might cost them.

Last week the Government introduced the Higher Education and Research Reform Amendment Bill 2014 into the House of Representatives. This Bill contains the reforms to higher education announced in the 2014-15 Budget, including the deregulation of the fees that universities can charge students for Commonwealth Supported Places (CSPs).

At present, students in CSPs (mainly bachelor degree courses at public universities, but also some post-graduate coursework degrees and selected degrees at private institutions) pay a contribution depending on the courses they study. For 2014, these range from $6,044 per year for courses such as education, humanities and nursing to $10,085 for medicine, law and economics.

Under the legislation before Parliament, from 1 January 2016, the Commonwealth’s contribution for CSPs will be reduced by around 20 per cent on average, but universities will be able to charge students however much they like.  There has been much speculation about what this will mean for fees, with universities needing to increase fees by around 30 per cent on average to make up the shortfall in Commonwealth funding, but some suggesting fees for degrees such as medicine could be as high as $180,000 or around $30,000 per year.

Even for those universities just seeking to recover costs, the Innovative Research Universities (IRU) group have produced several models of how these increases could be implemented. According to the IRU modelling, if the changes to Commonwealth funding levels were applied on a course by course basis, fees for some courses such as humanities and mathematics would go down, while fees for environmental studies would more than double. Other alternatives include implementing a flat increase across all courses (estimated at around $2,200 if spread across the entire student body) or increasing all course fees by a standard percentage.  All these options might produce the same financial outcome for universities, but they will have differing impacts on students. However at this stage no university has produced even indicative fee structures or levels.

Under the proposed legislation, students who were enrolled in a CSP on 13 May 2014, or who had been offered a position before then and deferred, will continue to study under the current fee arrangements until 31 December 2020, so long as they remain studying in a CSP, or are on an authorised break. This means the majority of current students will be able to complete their courses on the same fee basis as they started them.

By the time the 2016 cohort are making their course selections universities will have probably made decisions on their fees, and in fact may be using price as part of marketing to these students.

However, those making decisions about university course selections now will know the level of fees for their first year of study if they commence in 2015, but could be hit with substantially increased fees for subsequent years. It is unclear how they will respond to this:

  • Will it mean decreased levels of deferral as students seek to capitalise by getting one year at lower fees?
  • Will students make decisions based on what they think fees might be for different institutions and courses?
  • Will more students be seeking to change universities and courses at the end of first year when they know what fees are going to be charged?
  • Will some opt-out of higher education altogether because of concerns of the cost of completing their qualification in the absence of any indication for universities about what that cost will be?

This uncertainty will flow through to universities, as the acceptance rates on offers may be somewhat higher than in previous years, if fewer students defer, or lower, if many are scared off by potential fee hikes, and there may be greater movement between institutions once fee levels are known.

Of course, the passage of the legislation is not guaranteed, with the likelihood of amendments being negotiated in the Senate, which only adds to the uncertainty for those having to make decisions in the next month.



Flagpost is a blog on current issues of interest to members of the Australian Parliament

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