Never choose a simple scheme when there is a complex alternative: that, unfortunately, seems to a maxim of higher education policymaking. It was on display again yesterday morning at a Group of Eight forum on higher education and social inclusion.

In her presentation (ppt), Sydney University Deputy Vice-Chancellor Ann Brewer suggested an ‘equity trading scheme’ to encourage universities to enrol more students from low SES backgrounds. I must admit she lost me on the detail of how it would work, but presumably it would mean that those universities (like, I suspect, her own) that failed to meet their equity targets would have to buy credits from those that had more credits than they needed.

There is a much simpler way of dealing with this problem, which is to fix the market design of the whole Commonwealth funding scheme. At the moment, the total number of Commonwealth-supported places is largely fixed overall and for particular institutions. This means that all the specific proposals for recruiting low SES students she and other presenters offered would operate in a zero-sum game. The only way to increase low SES numbers is by decreasing numbers from other SES groups.

Universities have weak incentives to spend large sums coaxing under-prepared low SES students into university when they can take bright, well-educated upper-middle class kids who apply without needing encouragement. Brewer is right that the incentive structure would need to change before this would happen. But there is a simpler option than an equity trading scheme: just deregulate the market.
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The Liberal students/Young Liberals Make Education Fair campaign now has a Senate inquiry behind it. The inquiry’s terms of reference include looking into:

The current level of academic freedom in school and higher education, with particular reference to:

1. the level of intellectual diversity and the impact of ideological, political and cultural prejudice in the teaching of senior secondary education and of courses at Australian universities, …
2. the need for the teaching of senior secondary and university courses to reflect a plurality of views, be accurate, fair, balanced and in context; and
3. ways in which intellectual diversity and contestability of ideas may be promoted and protected, including the concept of a charter of academic freedoms.

Though there is precedent for the idea of academic freedom for students, I don’t think this is a useful concept, especially not for school students or undergraduates. Their main task is to master a body of knowledge, the content of which is to be determined by those with expertise in the field.

In many disciplines, there will be disputes among experts on some issues. As part of learning their subject, students should be made aware of these disputes and able to take a point of view, within the constraints of scholarly argument. But it is reasonable that students be held within established debates rather than able to claim ‘academic freedom’ to take an idiosyncratic perspective.
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In a blog post earlier this month, and in a subsequent Higher Education Supplement version of the post, I expressed doubt as to whether Raffles College of Design and Commerce, formerly known as KvB Institute of Technology, had current ‘central management and control’ in Australia. This was due to it now being owned by the Singapore-based Raffles Education Corporation. If it did not have this central management and control, amendments currently before the Parliament could lead to its students losing access to the FEE-HELP loan scheme.

The Higher Education Supplement and I have now received a letter from Professor Ron Newman, CEO and Chair of Raffles College of Design and Commerce, stating that it meets the requirements for FEE-HELP approval and therefore that they will be compliant with the new legal requirements.

Newman’s letter states that the members of the College’s Council all live in Australia, all but one of the eight members of the academic board live in Australia, three of the four company directors live in Australia, and it has a registered office in Sydney.

The issue here is what constitutes central management and control, but I agree that this sounds as close as is possible to central management and control being in Australia as is possible with 100% foreign ownership.

I’d note too that neither my post nor my article were intended to be criticisms of Raffles; only of the misguided policies of the former government that the current government was legislating to enforce.

The SMH report of the higher education review discussion paper picks out one of its very few quotable quotes, describing the funding system as:

at best complex and at worst anomalous, inconsistent and irrational.

This will come as no surprise to readers of this blog.

There are a few instances of this kind of frank analysis. The discussion paper summarises the research on what effects increases in student charges have had on low SES groups or particular disciplines (ie, none), so we now have a government document that effectively admits that the hundreds of millions of dollars the government is spending reducing charges for maths and science students is money wasted.

The government’s rhetoric about cuts to per student expenditure is also put into context. Labor has preferred out-of-date OECD data which ends in 2004, conveniently missing the surge in spending per student since then. Here is the key sentence (p.15):

From 2005, income per place has increased and in 2006 was $15,090, or 7.2% above the 1989 level (in real terms).

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I fear I may be, unintentionally, partly responsible for a minor piece of protectionism currently on its way through federal parliament.

The story started last year when I was researching for a paper on private providers of higher education (like many of my research projects, it has fallen victim to the daily bombardment of urgent tasks). These providers have been assisted by the extension of the FEE-HELP loans scheme, which lets their Australian students borrow money on similar terms to HECS students in Commonwealth-subsidised places at public universities.

However, the Higher Education Support Act 2003 requires that in order to be eligible these providers must (among other things) have their ‘central management and control in Australia’. This was always a strange provision, since there could be many benefits from having foreign higher education providers set up in Australia.

Indeed, not very long after the Act came into force the government itself came to the same conclusion, but instead of changing the law passed a special amendment permitting the students of the Adelaide campus of the Pittsburgh-based Carnegie Mellon University to get FEE-HELP. In the process, it added another strange ideological qualification, with the provision reading:

Carnegie Mellon University, a non-profit organisation established under Pennsylvania law. (emphasis added)

But I digress. In the course of researching the ownership of private providers, I came across two that had, since becoming eligible for FEE-HELP, been taken over by foreign companies. In the case of one of them, the government’s own higher education institution website is advertising this as a positive:
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My quick analysis of the higher education aspects of the budget is online at The Australian. I had a 9pm deadline, so not much time to read the relevant parts of the budget papers and write the article (Wayne Swan’s voice droning in the background did not help either). Unlike last year, though, there wasn’t too much to absorb.

Labor’s estimated spending for 2008-09 is less than what the Coalition had in its forward estimates. There seems to be a small cut in the Institutional Grant Scheme, which is the block grant for research, but I think the main cause is that the first distribution from the investment fund that Costello set up last year has been postponed. It will be the leanest year for universities in a long time.

In one of the many possible budget savings that probably won’t be announced next Tuesday, Andrew Leigh suggests charging elite sportspeople for their Australian Institute of Sport education. This is a rare issue on which I broadly agree with The Australia Institute, which put out a paper (pdf) some years ago callling for income-contingent loans for AIS sportspeople, as Andrew L also proposes today.

Currently Australia’s elite sports education costs about $130 million a year, though I could not quickly see how much of that was directly spent on people enrolled at the AIS. Even if all of it was recovered it would not exactly be a major blow against big government, but worth doing.

Governments have, however, long been wary of this idea. I’m not sure whether this is because they think the negative publicity involved with popular sportspeople criticising them outweighs the relatively small financial benefits the scheme would bring to the government, or whether they were worried about triggering ‘HECS for TAFE’ (assuming that the AIS is a glorified TAFE) controversy. Perhaps a bit of both.

Still, if the punters can be conned into structural reductions in spending to supposedly deal with a cyclical inflation problem, we should take advantage of this political opportunity.

Last year, after the federal government let universities increase annual student contribution amounts for commerce and economics students by $1,200, I predicted:

Applications for business degrees will not move outside the normal +/- <1% market share we see for most disciplines each year.

The basis of my prediction was that applications are primarily driven by interests, and that while financial factors can influence course choices within the range of a person’s interests, these financial factors will not just include course costs, but the anticipated long-term costs and benefits of a particular course choice. Business and economics students, even more than other students, are likely to be able to do their sums and realise that $3,600 in additional course costs is trivial compared to the long-term earnings gains they can reasonably expect.

Damien Eldridge wasn’t so keen on my analysis, pointing out (correctly) that what mattered here was the marginal economics and commerce student, and that a shift in relative prices could see some move to other disciplines that interest them. He suggested that they might go to geography or sociology.

The applications data for 2008 was released today, which shows that my prediction was correct but also reports numbers consistent with Damien’s analysis. Management and commerce did lose market share, by 0.31% of all applications. As usual, no discipline gained or lost by more than 1% market share, demonstrating the high year-to-year stability observed in this data, despite occasional shifts in relative prices. The broad discipline cluster that includes geography and sociology gained 0.43%. Engineering draws on similar quantitative skills to commerce, and many engineers end up as managers, so I think this would be another (and perhaps more likely) alternative course, and it gained 0.53% of market share. Read the rest of this entry »

As we saw in the case of Joy Kyriacou a couple of weeks ago, there are people whose sense of entitlement to the earnings of others is completely shameless. Ms Kyriacou, as readers may recall, thinks that her fellow Australians shoud pay higher taxes so that she does not have to postpone her first overseas holiday while repaying her HECS debt.

This morning The Age brings us La Trobe University sports manager John Dumaresq, who in a criticism of voluntary student unionism that looks more like a defence to me, explains why it is harder than before VSU to get members of the women’s football team to go to interstate matches:

“Students think, well, I can spend a week on the Gold Coast or I can work and at the end of the year with $700 [the cost of the Gold Coast footy trip] I can go to Thailand or Vietnam for an overseas trip.

They have to weigh it up, but in the past they might have done both because it was subsidised,” Mr Dumaresq said.

So on Mr Dumaresq’s view, other students - who if we believe NUS are poverty-stricken - should pay higher charges so that women footballers can go to the Gold Coast and on an Asian holiday.

I do not support price control, and therefore I cannot support that aspect of the VSU legislation. But as I have always conceded, the previous system was riddled with inequities and inefficiencies. The forced unbundling was useful shock therapy in clearing these away.

When the system is deregulated, universities will presumably think carefully before including the cost of too many student junkets in their price structure.

I expanded on my arguments against reducing HECS-HELP debt in exchange for community service for the Higher Education Supplement on Wednesday, but I am yet to convince everyone I have spoken to about the idea.

My main objection is to the link between community service and student debt, since I disputed the synergies between the two. If taxapayers are going to support community service, they should try to recruit the best candidates for the available work, whether or not they have student debt.

Against this view, I was pointed to Andrew Leigh’s comments in his AFR column:

Each year, approximately 75,000 young Americans participate in AmeriCorps, and many continue to work with the community after their service year ends. Implemented here, a similar program might have practical benefits for underprivileged communities. But its ‘eye-opening’ benefits could be greater still - giving affluent suburban youth a chance to spend a year facing disadvantage in all its complexity. Read the rest of this entry »