Category: Higher education

Uni fees and the working class

~ Andrew Norton ~ 6 Comments

The Age this morning reports the findings of 2006 census analysis I did wearing my University of Melbourne hat.

It looks at 18 and 19 year olds living at home (so we can see parental occupation and household income) to see how socieconomic background affects university and TAFE attendance rates. As there are similar census studies for 1991, 1996 and 2001, we can also observe trends over time.

For regular readers of this blog, the finding that the increased university attendance charges in 2005 had no negative impact on low SES attendance rates will come as no surprise. But the growth observed between 1991 and 2001 for all groups has stalled.

Unfortunately, the 1991 to 2001 census data does not disaggregate 18 and 19 year olds; which means it is hard for me to work out whether this is a real stalling, or a by-product of students starting university studies at a later age. For the 2006 census, there were significant increases in university attendance rates between age 18 and age 19 (21% of 18 year olds, 30% of 19 year olds).

The most striking finding, as it had been in earlier census-based studies, was that for the sons of blue collar families the normal pattern of university attendance increasing with household income is reversed. The more the family earns, the less likely it is that their sons will attend university, and the more likely it is that they will attend TAFE. For the daughters, the usual relationship is observed, but the attendance rate is only 3% higher in the wealthiest blue-collar families than it is in the poorest.
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OECDitis, again

~ Andrew Norton ~ 13 Comments

Yesterday Education Minister Julia Gillard announced a major review of higher education policy, to report by the end of the year. The terms of reference are sensible enough. But I hope we will get over the bout of OECDitis on display in the Minister’s speech to the AFR higher ed conference.

As I noted last year, OECDitis is the modern-day version of the cultural cringe, except that now it’s not England that sets the benchmark for Australia, it is the OECD average. Whether or not other OECD countries are actually getting good outcomes, or if they are whether doing the same thing would work in Australian conditions, is all irrelevant. We must at least be the same as the OECD average.

So according to Gillard:
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Why do for-profit higher education providers have a small market share?

~ Andrew Norton ~ 48 Comments

In this week’s Campus Review, John Quiggin in polemical mode takes aim at for-profit higher education. He claims ‘for profit education has been a consistent failure in all times and places’ , with some ‘limited exceptions’ in vocational training.

Curiously, he provides very little evidence of the failure of for-profit higher education. He reports some of the legal troubles of the University of Phoenix, but it has 250,000 students and has operated successfully for many years, as have various competitors in the US market. The legal troubles relate to violations of student admissions and loans regulations, not the quality of their courses. The statistic he cites on their graduation rate refers to a market they barely target, full-time and first-time college attendees (as here, US completion statistics are of poor quality).

Apart from the Singapore-based but partly Australian owned U21 Global he doesn’t even mention any of the Australian for-profits, though there quite a few of them, with nearly 30 signed up for FEE-HELP (some with common owners). The players in the for-profit market include the stockmarket listed and profitable Navitas, the Australian College of Natural Medicine, and the various providers owned by Amadeus Education.

But there is an interesting issue here: why is for-profit higher education relatively rare? Even in the US, the for-profits have only about 1 million students out of a total enrolment of 17.5 million. (In 2006, about 20 Australia for-profits reported 5,094 students to DEST, but they were only obliged to report students receiving FEE-HELP.)

Professor Q’s answer is:

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Should the HECS debt be sold?

~ Andrew Norton ~ 13 Comments

Universities Australia, formerly the AVCC, today released a paper suggesting that HELP student loan repayments be securitised.

Versions of this idea have been around for many years. In the past, people in the finance industry have wanted to buy the stream of future repayments from previous HECS debts (now HECS-HELP and FEE-HELP). They would of course have demanded a huge discount on the face value of these debts, because of the risks of slow or non-repayment we have discussed before. For financial and political reasons, previous governments have never agreed to this.

The Universities Australia version gets around the political problem of explaining to the punters that the $13 billion dollars lent to students still outstanding at 30 June 2007 is, on the government’s own estimates, worth only $8.2 billion. It suggests that the government sells bonds in the capital markets to raise money for higher education, and uses the income stream from HELP repayments to finance the interest it would have to pay the bond holders. Money not immediately spent on universities would be put in a Future Fund-like investment scheme, and the returns spent on universities in later years.

This idea neither should nor will go far, for at least the following reasons:
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Post-VSU

~ Andrew Norton ~ 19 Comments

Youth Minister Kate Ellis has announced a ‘consultation’ on the impact of voluntary student unionism. There is a discussion paper available here.

With three weeks to get submissions in, it sounds like the government wants its views confirmed rather than informed. The fun here will be watching all the players in this dispute trying to come up with coherent justifications for their position.

Before the election, Labor’s then shadow education minister Stephen Smith said:

The key thing is making sure the services that have traditionally been sustained by the student groups are there for all students to enjoy into the future: childcare, sport and rec facilities and the like. ..[it is] the responsibility of the National Government and the universities to sustain those services. Those services are currently withering and dwindling on the vine. We will not allow that to occur.

But if the government isn’t offering universities any extra money, that can only be done by taking money away from education or research activities. And why should university students be entitled to childcare assistance not available to the general population? To the extent that student union provided childcare ever made sense, that was before it started raining cash on almost anyone who decided to reproduce. And will Labor’s higher education ‘revolution’ really begin on the sporting field?
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HECS deters theory wrong again

~ Andrew Norton ~ 7 Comments

The Education Department has quietly put on its website (in the file marked ‘Appendices’) the ‘equity’ student enrolment data. It’s more bad news for the ‘HECS deters’ theory, though good news for social mobility. The 2005 25% increase in student contribution amounts has had no negative effect on the proportion of students classified as being of low socio-economic status (using the proxy of postcode). In fact, they slightly increased their share of commencing students in both 2005 and 2006, and of all students in 2006 (there was a lagged effect in 2005 of a lower-than-usual intake in the previous year).

Low SES enrolments in the private sector are also up in asbolute and percentage terms, though there have been so many new institutions added to the list between 2005 and 2006 that the two figures are not directly comparable.

However, I would not read very much into these figures. This is a very flat indicator. If you round the numbers, every year since data collection begain in 1991 the overall share of low SES students of total enrolment has been 15%. In the two years for which there is data for private sector, it has been 13% after rounding.
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Is education really Australia’s biggest services export?

~ Andrew Norton ~ 4 Comments

According to reports in this morning’s papers, drawing on Monday’s ABS international trade figures, education is now Australia’s biggest services export, overtaking tourism by nearly $1 billion for 2007 ($12.5 billion vs $11.5 billion).

But as the ABS doesn’t follow tourists or students around counting how much they spend, both these figures are estimates of their expenditure while in Australia. The tourism figures are based on the International Visitor Survey, which asks departing international travellers various questions, including about their spending. It is an on-going survey.

The student data, by contrast, is updated much less regularly. It is based on the Survey of International Students Spending (pdf), last conducted in 2004-5, and updated according to the CPI.
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The cost of FEE-HELP

~ Andrew Norton ~ 50 Comments

Providing me with my second page one dial-a-quote this week, the SMH this morning leads with a story titled ‘Student debts out of control’. Drawing on an article by Bruce Chapman in this week’s Campus Review, it says:

GRADUATES from private colleges and universities are costing taxpayers more than those from public universities, and new ministers of religion present one of the greatest burdens.

Though for reasons I will explain this is not correct, Chapman’s original article does make a valid point. This is that under the FEE-HELP loan scheme for full-fee students there are implicit subsidies because student debt is only indexed to inflation, meaning that the taxpayer bears most of the real cost of lending students money to pay their tuition fees. (Aspects of this issue were discussed on this blog last October.)

Undergraduate FEE-HELP students do pay some real rate of interest, because they have to pay a 20% surcharge on any amount they borrow (eg, if they borrow a tuition fee of $10,000, they will owe the government $12,000). If these students repay quickly, that could work out at quite a high real rate of interest. But if they borrow a large sum that takes many years to pay back then their real rate of interest will be low, and they will effectively receive a subsidy from taxpayers.
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NUS’s travels towards coherence

~ Andrew Norton ~ 15 Comments

At its annual conference last month, the National Union of Students rolled over on compulsory and up-front amenities fees. According to its new president, Angus McFarland, it was a matter of accepting reality. “We were … aware … that the Labor Party had comprehensively ruled out returning to the upfront fee-paying system,” he said.

But they are not giving up on a fee. One of the options they plan to present to the federal government is a HECS-style scheme to avoid the up-front charges of the old amenities fee, but to restore a revenue flow from students.

This is certainly less incoherent than NUS’s previous position, that the HECS which funds tuition on an income-contingent basis should be reduced, while a up-front, completely deregulated fee which funds other people’s childcare and student union hacks should be maintained. To the extent that made any sense, it was sending very mixed messages.

But removing the up-front element only solves half of NUS’s coherence problem. As the huge drops in student union membership reported in today’s papers demonstrate, their services were of peripheral importance to most students (or more cheaply acquired on a user-pays basis). So NUS’s position is that students should be allowed to spend more on services they mostly don’t need, while being against students being allowed to invest more in their principal asset, their human capital.

Still, in calling for fees of any kind, against the price control of the two major parties, NUS is in the deregulation camp. They just need to take their deregulatory ideas a lot further than they have.

Would more student income support improve academic results?

~ Andrew Norton ~ 38 Comments

In addition, I’m not convinced that if all university students in Australia received free education and enough income support to live comfortably that the majority would spend all that extra time studying.

– backroom girl this morning.

In her doubts, backroom girl goes against some higher education orthodoxy. 43% of Australian students in a survey released last year agreed with the proposition that ‘work commitments adversely affect my performance in university’. The Vice-Chancellors have called for more Youth Allowance to ‘ensure optimal educational outcomes’.

It certainly seems plausible that if students worked fewer hours they might optimise their educational outcomes. But like many plausible-sounding ideas in higher education, the evidence for it is mixed at best.
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