Archive for the 'Higher education' Category

Finding a cheaper way of delivering higher education

In a sign perhaps that the higher education sector is worn out from seemingly endless reviews, the base funding review received only 161 submissions compared to 353 for the Bradley review.

I’m yet to read more than a fraction of the latest batch (though I think I am safe in predicting that ‘gimme money’ will be the dominant message), but there is at least one interesting submission – from Lawrence Cram, a Deputy VC at ANU, though for reasons that will become apparent the submission is personal rather than institutional.

What Cram does is apply econometric analysis to the expenditure of universities, along with their teaching outputs (as measured by completions) and research outputs (as measured by publications). I will have to wait on people expert in econometrics to judge the value of Cram’s model.

Cram’s finding is that expenditure per completion is around $26,600 and expenditure per publication of $226,600. Figure 2 in Cram’s paper indicates that these represent improved efficiency since 1996. This is plausible, given casualisation of staff and increased class sizes on the teaching side, and the pressures of publish or perish on the research side. Read the rest of this entry »

The real academic freedom issue

The government proposes amending the higher education funding legislation to include this provision:

A higher education provider that is a *Table A provider or a *Table B provider must have a policy that upholds free intellectual inquiry in relation to learning, teaching and research. (emphasis added)

This is a curious provision. For a start, it is quite similar to provisions in the draft higher education provider guidlines which will apply to all higher education providers, not just those receiving Commonwealth research funding (tables A and B). It’s more explicit about how these principles will be implemented – a policy of unspecified content as opposed to perhaps just a practice – but doesn’t seem to add much.

But what’s ‘learning’ doing there? The Labor ministers responsible for universities issued a media release today complaining about among other things Coalition talk about extending academic freedom to students, a follow-up to their Senate inquiry into biased left-wing academics. But it seems to me that it is Labor that is opening up the issue of academic freedom for students in the way that it has phrased this provision. Teaching and research is what academics do, but learning is what students do. Read the rest of this entry »

Should the student learning entitlement be abolished?

The higher education funding legislation introduced last week proposes abolishing the student learning entitlement. The SLE caps eligibility for a government-subsidised place at 7 years, though there are various exceptions, including for honours years and postgraduate courses.

According to a story in today’s Higher Education Supplement, the Coalition plans to oppose abolition of the SLE, which was introduced by the Howard government from 2005.

The SLE does generate a lot of bureaucracy in tracking a student’s usage, and in the 7th year since it was introduced we are at the point when universities and students will need to be particularly careful about when a student exhausts their entitlement. Significant confusion about the current rules doesn’t help.

There are also some doubts about how much abolishing SLE would save, since students who have reached their seven years can switch to FEE-HELP to finance their continuing study. As full-fee places are typically more expensive than SLE-supported courses, this could mean that at least in cash terms, the government may outlay more for a student who has exceeded their SLE than one who continues in a Commonwealth-supported place (though they may eventually recover some of their money through HELP repayments). Read the rest of this entry »

Legislaton for a semi-demand driven higher ed funding system

Legislaton for the demand-driven higher education funding system was finally introduced into Parliament yesterday, more than two years after it was first announced.

The government’s nervousness about how much it might cost is very evident. It reserves the right to cap how much funding any university can receive, though the cap cannot be less than the previous year. So it will be demand-driven only up to the point that demand is too expensive. It effectively means that there is not actually a student entitlement to a Commonwealth-supported place, as originally envisaged, though in practice few are likely to miss out in the near future.

Nor will universities have complete freedom to respond to demand. There is a capacity to set both minimum and maximum numbers by course, though only medicine is certain to face a cap on numbers. The reason seems plausible enough, a shortage of clinical training places, but previous attempts to regulate medical student numbers are the most commonly-cited reason for moving to voucher system: the government’s 1990s assessment of how many students were needed was hopelessly wrong, and we would have been better off if universities had responded to demand.

So though the system will be called demand-driven, that is true only in a relative sense. Specifying the number of students by university and funding cluster (groups of disciplines with the same Commonwealth funding rates) will end, but the allocation of student places will only be partly and conditionally handed over to the market.

HELPless taxpayers ripped off

About a year ago, I called the ATO. Unlike most people who call the ATO, I was hoping I could pay them some money – albeit not because I wanted to give the ATO revenue, but in order to make a political point about the absurdities of the HELP loan scheme.

This is the interaction between the bonus for repaying ‘early’ (to be cut from 10% to 5% as a result of the Budget) and the arrangements for FEE-HELP applying to students who enrol through Open Universities Australia (as I had) and postgraduates. Undergraduates taking out FEE-HELP loans have to pay a 25% debt surcharge/loan fee, but OUA and postgraduate students do not.

The incentive that creates, of course, is to take out a FEE-HELP loan whether you need it or not and then repay ‘early’ and get the bonus. For people like me, rather than this being a bonus for repaying early, it is a discount for paying late. Read the rest of this entry »

More HELP reform – reduced discount for repaying early

Last week’s budget leak about cutting the discount for paying student contributions upfront was only part of the HELP reform story. They are also going to cut the ‘bonus’ for repaying early from 10% to 5%. (For example, if you pay the ATO $1,000, they will now wipe $1,100 from your HELP debt, but only $1,050 if this reform passes).

This is a broader change than the upfront initial payment discount, as the early repayment bonus applies across all the HELP schemes. It will partially deal with an absurdity that I plan to exploit, of people taking out FEE-HELP loans and then repaying ‘early’, effectively reducing the cost of the course at taxpayer expense.

The bonus was last cut in 2005, and it did push voluntary repayments down:


Source: Higher Education Report 2009 Read the rest of this entry »

The longer-term effects of upfront discount rates

Rajat asks about deferral trends over time. The figure below is the percent of total student liabilities deferred 1989-2009.


Source: Higher Education Report 2009.

As you can see, the trend is consistent with the discount rate having an effect. When it increased in 1993 from 15% to 25%, more people paid up-front and the deferral rate dropped. When the discount decreased from 25% to 20% in 2005, the deferral rate increased, ie fewer people considered it worth paying upfront.

The data is also consistent with the effect building over time. Read the rest of this entry »

Should the upfront student contribution discount be halved?

According to media reports this morning, the government is planning to cut the discount on student contributions paid up-front from 20% to 10%.

According to The Age’s version of things, ‘the government will justify the cut on the grounds that the benefit goes mostly to wealthy families.’

But contrary to common impressions, the discount was not intended as a benefit to anyone other than taxpayers. Because it is very expensive to lend money at zero real interest, students paying up-front can save the goverment money. In a couple of scenarios I did last year, for male arts and law graduates earning median incomes in professional or managerial jobs, it was slightly cheaper for the federal government to pay the discount than to pay the interest subsidy on the HELP debt.

However, the economics of the discount depend on how long students would otherwise take to repay. For quick repayers (or people who would pay upfront anyway), the government would be better off not giving the discount. If students are going to repay slowly, the discount looks like a better deal for taxpayers. Another factor is that up-front payment removes the risk of non-repayment.

Whether or not halving the discount makes financial sense for the government depends on the behavioural response. Read the rest of this entry »

Why are English uni students going to be charged so much?

To great controversy, England is lifting the cap on university fees to £6,000, with charges up to £9,000 if access measures are put in place. To the government’s unpleasant political surprise, most are going to the full £9,000 from 2012. This is similar to the experience in Australia in 2005, when universities were permitted to charge up to 25% more than the previous HECS rates (except in education and nursing). Pretty soon all were charging the maximum fee.

While not all these fees are rip-off prices, given the cuts to tuition subsidies, I don’t think this is a very good outcome. Even on zero subsidy, in some courses £9,000 in income would translate into significantly more than cost, if Australian costs are any guide. So what’s going wrong?

Without being expert on English higher education, the mistake appears to me to be partially deregulating prices while regulating supply. In the UK as here in 2005, when the government restricts supply to well below demand it’s a licence to increase prices. If people want a degree, they will have to take what is offered even if it is over-priced (though we are yet to see if in practice demand will dip in the UK). Uncapping supply and letting new entrants into the system would create more pressure to keep fees down. Read the rest of this entry »

Our ‘over-enrolled’ universities

Some Vice-Chancellors will be relieved that tertiary education minister has issued a media release talking up the promised demand-driven funding system. It is an obvious savings measure for a cash-strapped government, with no parliamentary approval required for delay and few punters having any idea what it is.

Data released by Evans’ office (though not in the link above) can be compared to funding agreement data to see university ‘over-enrolment’ levels. Under a phase-in to the demand-driven system, universities can receive government tuition funding up to 10% more than their agreed amount for 2010 and 2011 (up from 5% under the previous government). For students enrolled above that, they get the student contribution amount but not any direct Commonwealth tuition subsidy.

Though we can’t directly extrapolate from student numbers to $ amounts, 23 universities have hit 10% undergraduate over-enrolment, and 7 have hit 20% undergraduate over-enrolment. Australian Catholic University is a staggering 41% over-enrolled. Across the whole system, over-enrolment is at 13%.* Read the rest of this entry »