Trying hard to find a redeeming feature in Labor’s full-fee place phase out

It is tempting to put the $249 million phasing out of full-fee domestic undergraduate places at public universities, some details of which were announced yesterday and reported this morning, in the same category as the $562 million wasted in a futile attempt to boost maths and science. Putting the two policies together, $811 million will be spent to add not one extra student place and to actually reduce the total funding universities receive. Even by the very low standards of Australian higher education policymaking, that is pretty spectacular.

The full-fee domestic undergraduate places were always a case of 2nd-best policymaking. The quotas and price controls (the 3rd best policy) crippling the Commonwealth-supported higher education system created artificial shortages of university places in high-demand courses. Allowing universities to offer additional places – or more accurately, allowing univerisites to offer those places to Australians rather than overseas students – alleviated these shortages.

The common criticism was that this breached the merit principle of university admission. I never found this argument to be persuasive, because I don’t see a hierarchy of school results to be an inherently superior method of choosing students. But the policy did create some absurd price discrimination, with students paying massively different fees for no reason other than falling on different sides of an ENTER rank that was purely the result of the intersection of demand and a semi-arbitrarily set level of supply.

In a proper student-demand system (the 1st best policy), this problem would go away, and all students would be treated equally. So this gives us one way to find a redeeming feature in Labor’s otherwise misguided policy of phasing out full-fee domestic undergraduate places. In the short-term, it will reduce flexibility, choice and university revenue. But looking at it in the longer term, if the Bradley higher education review committee recommended a demand-driven system with fee flexibility the full-fee places could be removed without loss or controversy anyway. Being very charitable to Labor, we can classify the $249 million as a downpayment on proper reforms, rather than categorising it with the cuts to HECS for science and maths as pure waste.

15 thoughts on “Trying hard to find a redeeming feature in Labor’s full-fee place phase out

  1. It is hard to find words to express the absurdity of ditching a policy which (a) injects private funds into the uni system and (b) provides an opportunity for students who are seriously motivated to take on a course.
    In view of the number of students who waste their time and our money wandering the campus for a year or two with no real motivation, that is a very sad decision.

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  2. I couldn’t agree more with this post (and Rafe)
    The really humourous thing is that part of the “compensation” is yet more government (under) funded places. Presumably they must think that having the highest student-staff ratio in the Western world somehow leads to good outcomes. In addition, if they bothered to look at how university budgets work, then this is a huge negative for the priority areas of maths and science — this is because these areas already don’t attract enough students according to government desires, which means you take away full-fee paying students and replace them with loss-making undergraduate places that are not going to filled in any case.

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  3. You are in a very kind and generous mood today. Trying to find something positive to say about a third rate policy. Well done. There should be more on this sort of generosity in public discussions. 🙂

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  4. What would be interesting is the pass rates of full fee paying students and the government funded students. The debate could then be based on fact instead of fiction.

    Or in other words, does it provides an opportunity for students who are seriously motivated to take on a course ( as Rafe claims), or is a case of rich dads ( or mums) giving the dills a second chance.

    I do have enough faith in the system to believe the results, though listening to some lecturers lamenting about standards?

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  5. Charles – I have not see that division published, but we do have data on international students, who are almost all full-fee, and local students, who are almost all government-subsidised. Onshore international students have a fractionally lower pass rate, though it differs by discipline, higher in some, lower in others. Offhshore international students do worse.

    Taken as all full-fee domestics compared to all government-subsidised domestics the former would probably have a higher pass rate, as full-fee students have been concentrated in courses that have very high cut-offs even on a full-fee basis, whereas the courses will low cut-offs don’t have any full-fee students.

    Grade point average would be more interesting. The full-fee students had slightly lower school results, but if they are prepared to pay high fees they are probably very keen and work hard.

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  6. “or is a case of rich dads ( or mums) giving the dills a second chance.”

    Where I work, we have quite a few students that study single subjects (it’s cheaper than enrolling in a course if you only want 1 major). Almost all of them are 30+, so my bet is that your impression about who they are is really off the mark — and any comparison with OS students is also probably incorrect — they’re really a different demographic (or perhaps where I work is atypical of full fee payers).

    In any case, I don’t see the problem with giving “dills” a second chance. People don’t do well in high school for all sorts of reasons, many of them which have nothing to do with brainpower (e.g., sickness, going to a poor school, family breakdown etc.). It’s really a bad and incorrect stereotype you have.

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  7. Charles – Though as my post argues, the issue here is less whether the students involved should be able to enrol with an institution that wants them than the arbitrary price discrimination.

    On the merit issue, however, an argument could be made that if the full-fee student is taking all the financial risk of failure they should be entitled to enrol even if they have a higher chance of failure.

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  8. If education is a scarce resource then it should be allocated on merit, not on the level of parental success or worse, money inherited. That is if you actually believe in a meritocracy and I do.

    There are in my view only two arguments for full fee paying places.

    1) The scarcity can be eliminated with additional funds. I would be willing to bet that full fees are still only paying some of the variable costs and contribute very little to the fixed costs, but funds is funds.

    2) Everyone deserves a second chance; a very strong argument for full fee paying mature age students.

    I’m sorry but I don’t believe the right of an institution to pursue half baked market goals should be the basis for education policy. And I am sorry once again, but I don’t believe teenager views of employment prospects should be the basis for the allocation of education resources.

    Policy has to fit within reality and within the social standards expected in a country. We have the largest middle class in the world and we have a very high level of education. It didn’t happen by accident, I suspect long periods of real Liberal (Menzies as an example was a strong supporter of higher education) and liberal labor governments has contributed.

    To be frank ideas that are little more than USA mistakes dipped in eucalyptuses scare me. The USA has royally stuff up their country, why should we do the same.

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  9. I like the abolition of full-fee places. I do believe Uni should be based on merit. Sure ENTER is a flawed system (TCE with its criteria driven system is better than a system where 50% of marks are derived from a 2 hour exam), but merit should still be the driving force.

    From my experience at Melbourne it “feels like” full-fee places are a way for inferior students to buy their way in.

    As you say Andrew, ideally this will be the stepping stone for HECS to be priced as “full fee” places were.

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  10. Do small differences in ENTER scores reflect substantial differences in merit? My experience (with Law/Course X students compared with Course X students) is that large differences do reflect something as the Law/Course X students typically stand out from the Course X students. But I’d be floored if ENTER grading is so precise that there is a significant difference in academic merit between someone getting 90 and being admitted and 89 not (or that the 89 is inferior). To take this point to an extreme, maybe uni’s should impose uniform ENTER scores across courses so to preserve academic merit across the university?

    Is there any data on what the uni’s did systematically in terms of going below ENTER scores with full fee students?

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  11. Shem,

    if you admit the measure is hopeless (which it is — correlations with marks range from about 0 to 0.4– and that’s at first year), then surely a fairer way of entry would be to set a lower bound cut-off where it isn’t hopeless (e.g., 60), and then randomly select people.

    The other thing about “buying your way in” is that you are confusing what you see with the whole picture. The most amount of money spent buying your way in is paid to expensive private schools. Why not allow people to go to public schools and then pay for a university place versus go to expensive private schools and get a university place for free? The second of these is exactly what happens now.

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  12. I don’t particularly have a problem with full-fee paying places. I would, however, like to see the CSP places being attached to individual students, rather than assigned to particular courses. As far as I can see, most of the so-called ‘dills’ at uni are padding out the numbers in low demand courses like Education. So we are actually educating dills on public money while others with quite respectable ENTER scores (but marginally short of the cut off) are paying full fees for high demand courses like medicine and law. I did hear that the DFEE cut off is required to be no more than 5 points below the CSP cut off, so it is not as if people with an ENTER of 60 are ‘buying their way into medicine.’

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