When students buy their way into public universities through full-fee places it is described as an ‘inequity’, but when public universities buy students – as many of them are busy trying to do now with scholarships – it is reported by newspapers without negative comment and I suspect with very little tut-tutting among readers.

The SMH tells the story of former North Sydney Girls High student Jie Gao who, because she received 99.95 as her Year 12 score,

was offered a $10,000 annual scholarship by the University of Sydney and the University of NSW, a $4000 annual scholarship from Macquarie University and a $13,000 scholarship – funded by business – to attend the University of Technology, Sydney.

Yet which practice is really more objectionable? The full-fee students don’t make anyone worse off – indeed they generally make life better for other students by easing the financial pressure on universities and (usually) by giving up a HECS place in their second preference course. But the main effect of the scholarships is to provide further reward to people who are already very fortunate simply by virtue of their academic ability, and many of whom will also come from the privileged backgrounds that tend to produce very high school results. Though many universities have donations and endowment income that they have to spend on scholarships anyway, surely need would be a better basis for distributing it? And if the money comes out of general revenue, scholarships deprive cash-starved teaching activities of much-needed resources.

‘Merit’ scholarships are offered because of status competition between universities, as status partly comes from enrolling the best school leavers. But scholarships probably aren’t highly effective in doing this. As Jie Gao sensibly says:

she would make her decision according to which university and course she preferred.

I’d guess her choice is between UNSW and Sydney, which offer identical scholarship packages. So the scholarship will be a neutral factor, as it will be for other very bright students. Both universities, and their other students, would be better off if they had never started this status competition and instead spent the money on something that would make a difference.

Only UTS really has anything to gain by trying to push its way into the NSW higher education status game, and this is presumably why it is out-bidding UNSW and the University of Sydney. But how prestigious can you be if you have to pay bright students to attend? Isn’t this just a relationship of convenience, like the ugly but rich old guy with the attractive young woman who is really only after his money? And if the student is ambitious, what makes more sense – an extra $3,000 a year (less tax) or being with other very bright students at UNSW or Sydney, where the long-term networking could be worth much more than the added scholarship?

Perhaps the better measure of prestige is not 99.95 students, but how much the full-fee students are prepared to pay. If students are willing to pay top dollar, universities know they have something that people really want.