Chapter 6: ensuring access and equity
6.4 Monitoring financial barriers
Some studies have suggested that the tuition cost of higher education may have an impact on the attitudes and aspirations of low SES students and their families while at school. For example, a report by James states:
The financial cost of studying at university, and the perceptions of the cost, may have significant influence on the post-schooling choices of students from low SES and rural backgrounds ... low SES students are more likely than other students to believe the cost of university fees may stop them attending university (39 per cent, compared with 23 per cent of higher SES students) (2008, p. 35).
The Panel commissioned a study (Deloitte Access Economics 2011b) to investigate whether changes to the level of student contributions or the repayment thresholds under Australia’s income-contingent loan scheme had an impact on student demand for higher education, with particular reference to students from low SES backgrounds.
The study found that the reforms to HECS and HECS–HELP in 1997 and 2005 when fees rose and repayment thresholds changed, were linked to a reduction in the total number of university applications, compared with the levels that would have been expected had the reforms not taken place. The study estimated that the reforms on these two occasions led to around 18,000 fewer applications per year (8 per cent) compared with those that would have been expected had the reforms not taken place. Despite this impact, the total number of applications continued to rise in those years. As changes to the repayment thresholds were made at the same time as changes to contribution levels, it is not possible to identify the cause of the identified changes.
The consultant was not able to isolate the impact of the policy changes to HECS/HECS–HELP and observed that the reduction in applications may have been influenced by other factors, such as changing workforce or economic conditions. Additionally, the introduction of differential HECS amounts in 1997 resulted in some courses with high private benefits on average having the highest contributions. This may have cushioned the impact on demand, as students tend to study these courses regardless of cost as it is perceived that the benefits will outweigh the costs. While the study was not able to examine whether the impact on applications varied according to SES groups due to data limitations, analysis of university commencements found that low SES students appeared to be more affected by price changes than other students. However, the proportions were very small. The analysis found that a 1 per cent increase in the price of all courses appeared to result in the share of commencements by students from a low SES background decreasing by 0.042 of a percentage point. Students from high SES backgrounds showed no price sensitivity to changes in relative price.
While the Panel was concerned about the implications of these findings regarding the impact of the level of student fees on participation by low SES students, it notes that the consultant’s findings differ from some previously published studies (Chapman and Ryan 2003, Marks 2007) which found that the introduction of HECS and the 1997 policy changes did not deter low SES students from participating in higher education. Additionally, a study by Gilboa and Justman (2009) found that in the presence of an income-contingent loan scheme there will be no impact on demand from increasing fees.
A number of submissions to the Panel stated that there was little convincing evidence that increases in student contributions had deterred participation in higher education or that low SES students are more debt averse than other groups. Nevertheless, some stakeholders expressed concern that an increase in fees could deter participation among prospective students (National Union of Students, submission no. 112). Others expressed concern that there may be a point above which fee levels begin to have an impact on participation rates (e.g The Australian National University College of Arts and Social Sciences, submission no. 101).
The Panel recognises that if the Government adopts its recommendations concerning student contributions, it will lead to higher student contributions in some disciplines. Potentially, this may be a disincentive for some students to enrol in higher education courses. However, the Panel also acknowledges that not all parts of a pricing system have to be progressive for the system as a whole to be progressive. The Panel therefore suggests, if evidence emerges that changes to student contribution levels appear to be having an impact on student enrolments in some fields, that the Government should address such concerns directly through targeted student income support, labour market programs or higher education programs.
6.5 summary and recommendations
The terms of reference for the Review asked the Panel to take into account the Government’s equity agenda of increasing access and participation of disadvantaged groups by providing universities with financial incentives to enrol low SES students when developing policy options on student contributions. The Panel considers that it is consistent with the purposes of the base funding system for it to promote access to universities and broaden participation in higher education.
supporting the cost of low ses students
The Panel notes that the proportion of low SES students in higher education has remained low over the last decade but is likely to rise in response to the Government’s target that 20 per cent of undergraduate students should be from a low SES background by 2020. Universities are likely to face new challenges in meeting the educational needs of low SES students as the proportion of low SES students enrolling in higher education increases.
Recommendation 25: supporting the cost of low socioeconomic
status students
The Australian Government should continue to support the differential cost of students from low socioeconomic backgrounds.
Monitoring impact on participation by low ses students
It has been suggested that the levels of student contribution towards the cost of higher education influence rates of enrolment among students from lower SES backgrounds. Although the
evidence for this claim is contested, the Panel recognises that its recommendation to rationalise student contribution levels will lead to higher student contributions in some courses of study. The Government should therefore monitor the impact of changes to student contribution levels on low SES enrolments. Should it appear that the changes are having an impact on low SES enrolment patterns, the Panel considers that a targeted program providing incentives for universities to enrol low SES students would be the most appropriate response. Pursuing such objectives through a targeted program would be more effective than making changes to levels of student contributions in the base funding system that will impact on all students rather than only the targeted group.
Recommendation 26: Monitoring impact on participation by low
socioeconomic status students
The Australian Government should monitor the potential impact of the changes in student contribution levels recommended by the Panel on the levels of participation by low
socioeconomic status (SES) students, so that should the levels of participation in some courses fall below desirable levels, the Government could address this through appropriate targeted programs that offer incentives for institutions to enrol low SES students in particular courses of study.
Funding for the Higher education Participation and Partnerships
Program
The total funding provided under the HEPPP as an enrolment loading in respect of each domestic undergraduate low SES EFTSL increases in the first two years, but from the third year the forward estimates provide $133 million per annum. The Panel considered that if participation of low SES students continued to grow, the funding should also grow so that the effective per capita amount does not diminish.
Recommendation 27: Funding for the Higher education
Participation and Partnerships Program
The participation component of the Higher Education Participation and Partnerships Program (HEPPP) should be uncapped and paid on a demand driven basis to universities as a low socioeconomic status (SES) loading on base funding. In order to maintain the value at full implementation of the HEPPP in 2012 of about $1,000 per low SES student equivalent full-time student load, the funding allocation should be increased.
expanding funding for partnerships
The Panel was impressed at the array of partnership and collaborative activities that universities are currently developing in response to the partnerships element of the HEPPP. Affecting aspirations, especially among secondary school students, is complex. An evaluation of the effectiveness of the HEPPP is being planned. The Panel considered that one way to strengthen and improve partnership activities would be to extend the funding for partnership activities to all parties in the partnership, such as schools, VET providers and non-profit agencies, and suggests that this be considered following the Review.
Recommendation 28: expanding funding for partnerships
Following the planned review of the effectiveness of the partnerships component of the Higher Education Participation and Partnerships Program, the Australian Government should consider expanding the partnerships component of the program. Funding could be provided directly to partners such as schools, vocational education and training providers and agencies working with disadvantaged communities.
adjustment to enabling Loading and review of effectiveness of
courses
The Enabling Loading is a targeted program that provides support for students in preparing for study in courses leading to a higher education award. However, as the total amount of funding is fixed, the per capita amount is almost half the value it was in 2005. For this reason the Panel recommends that the funding should be demand driven, uncapped, indexed and set at the per capita level for 2010. While concurrent enabling courses appear to be successful in contributing to retention of
underprepared students in higher education, the place of pathway enabling courses in the new tertiary education sector, with its multiple pathways to higher education, is unclear. The absence of student contributions for these enabling courses compared with award vocational courses may lead students to make inappropriate choices and for this reason, the Panel recommends the comparative effectiveness of these pathways should be examined. Since the data may take some time to obtain, the funding should be set at the per capita rate for 2010 as an interim measure.
Recommendation 29: adjustment to enabling Loading and review
of effectiveness of courses
A review should be conducted to assess the effectiveness of pathway enabling courses in comparison to other pathways to higher education, and in the interim the Enabling Loading should be set at the 2010 per capita rate (indexed for subsequent years).
acronyms and abbreviations of titles
ABS Australian Bureau of Statistics AEI Australian Education International ALTC Australian Learning and Teaching Council APA Australian Postgraduate Awards
AQF Australian Qualifications Framework ARC Australian Research Council
ATAR Australian Tertiary Admission Rank AUQA Australian Universities Quality Agency AUSSE Australasian Survey of Student Engagement BURF Better Universities Renewal Fund
CDP Capital Development Pool
CEQ Course Experience Questionnaire
CGS Commonwealth Grant Scheme
CHESSN Commonwealth Higher Education Student Support Number COAG Council of Australian Governments
CPI Consumer Price Index
DEEWR Department of Education, Employment and Workplace Relations DIISR Department of Innovation, Industry, Science and Research EFTSL equivalent full-time student load
EIF Education Investment Fund
FOE field of education
FTE full-time equivalent
GDP gross domestic product
HDR higher degree by research
HECS Higher Education Contribution Scheme HECS–HELP see Glossary
HEFCE Higher Education Funding Council of England HELP Higher Education Loan Program
HEPPP Higher Education Participation and Partnerships Program HESA Higher Education Support Act 2003
HWA Health Workforce Australia
ICT information and communication technology
ISCED International Standard Classification of Education NHMRC National Health & Medical Research Council
NUS National Union of Students
OECD Organisation for Economic Co-operation and Development
PPP Purchasing Power Parity
RFM Relative Funding Model
SES socioeconomic status
SRE Sustainable Research Excellence
TEFMA Tertiary Education Facilities Management Association TEQSA Tertiary Education Quality and Standards Agency
VET vocational education and training
glossary
Actual prices: Actual prices are prices in nominal value. Nominal value is expressed in money of the day.
Australian Tertiary Admission Rank (ATAR): The primary criterion for entry to undergraduate university programs, awarded to students who complete Year 12.
Base funding clusters: The Commonwealth Grant Scheme funding and student contributions for a discipline or a set of disciplines.
Bradley Review: The Review of Australian Higher Education, chaired by Professor Denise Bradley AC. The Bradley Review delivered its final report in December 2008.
Browne Review (Independent Review of Higher Education and Student Finance in England): The review of higher education funding in England which delivered its final recommendations in October 2010.
Commonwealth supported place: A higher education place which is funded by the Australian Government through the Commonwealth Grant Scheme. Previously called a ‘HECS’ place. Education Investment Fund (EIF): Announced in the 2008–09 Budget to support world-leading, strategically focused infrastructure investments that will transform Australian tertiary education and research.
Equivalent full-time student load (EFTSL): One EFTSL is a measure of the study load, for a year, of a student undertaking a course of study on a full-time basis.
Full-time equivalent (FTE): A member of staff who at a reference date has a full-time work contract in respect of their current duties, has an FTE of 1.00. The FTE for a member of staff who at a particular reference date has a fractional full-time work contract in respect of their current duties (ie. is working a fraction of a normal full-time working week, will be less than 1.0).
Higher Education Contribution Scheme (HECS): The system introduced in 1989 which required higher education students in places subsidised by the Australian Government to make a contribution to the cost of their course, underpinned by income-contingent loans. ‘HECS’ places are now called Commonwealth supported places for which there is a ‘student contribution amount’ with loans and discounts for upfront payment under HECS–HELP.
Higher education institutions: Refers to all institutions offering accredited higher education qualifications. This includes both public and private and self-accrediting and non-self-accrediting institutions.
Higher Education Loan Program (HELP): A program to help eligible students pay their student contributions (HECS–HELP for Commonwealth supported students), tuition fees (FEE–HELP for fee–paying students) and overseas study expenses (OS–HELP) through loans that are repaid through the taxation system (through either compulsory or voluntary repayments). HECS–HELP also covers the discount that Commonwealth supported students receive if they pay student contributions up front. There are bonuses for voluntary repayments.
Higher Education Support Act 2003 (HESA): The main legislation governing funding for higher education in Australia.
Income-contingent loan: A loan for which repayments are not required unless a person’s income reaches a certain threshold and with repayments that vary according to income above that threshold. HELP loans (and previously HECS and loans under other schemes that have been subsumed by HELP) have income-contingent repayment arrangements.
Low socioeconomic status (SES) students: The Index of Education and Occupation from the latest available Australian Bureau of Statistics Socio-Economic Indexes for Areas is used. The index value for each postcode is used to identify a postcode nationally as low (bottom 25 per cent of the population), medium (middle 50 per cent) or high (top 25 per cent). The number of students from a low SES background is then calculated by summing the number of students whose home postcodes as reported by university enrolment data are low SES postcodes.
Productivity: Productivity is defined as the ratio of output to input for a specific production situation.
Real terms (constant prices): Nominal value is the value of the grants expressed in the money of the day, that is, the actual amount of cash received by the universities each year. Real value is the nominal value adjusted for the effects of inflation so as to show the change in the purchasing power of the funding received. Unless otherwise stated in this report the index used to calculate constant prices is the Consumer Price Index Weighted Average of Eight Capital Cities [Australian Bureau of Statistics Cat. no. 6401.0] and the base year is 2009.
Sector: Categories of educational activity which are defined in terms of course type and award. Sectors within tertiary education are the higher education sector and the vocational education and training sector.
Tertiary education: In Australia tertiary education is generally understood to be post-secondary education. The OECD defines tertiary education as programs at International Standard Classification of Education (ISCED) levels 5B, 5A and 6. Programs below ISCED level 5B are not considered tertiary level (OECD 2010).
Transforming Australia’s Higher Education System: The Australian Government’s response to the Bradley Review, announced in 2009.
University: An Australian university is an institution which meets nationally agreed criteria and is established or recognised as a university under state, territory or Commonwealth legislation (Section 1.13, National Protocols for Higher Education Approval Processes).
Vocational education and training (VET): Vocational education and training provides skills and
knowledge for work through a national system of public and private training providers. A wide range of qualifications are available, including certificates, diplomas and some graduate courses.