Government spending on higher education

A commenter asks about how much Australia spends on higher education.

The main source for this is the DEEWR portfolio budget statement (outcome 3), with the DEEWR Annual Report also containing useful information. After taking out money coming from the Education Investment Fund, the budget for direct grant spending on higher education for 2009-10 is about $5.6 billion. Information on government subsidies per student by field of study can be found in the ‘further resources’ section of this site for university administrators.

More historical data (latest 2008) on funding for individual universities is available in the annual university finance reports. Unfortunately DEEWR has ceased timely publication of the previously annual higher education report so it is very difficult for the general public to find information on arrangements for a particular university.

However information on direct grants understates total higher education related spending. This year the government will lend about $3 billion through the HELP schemes, and recover about $1.4 billion in HELP repayments, leaving net lending of $1.6 billion. The government estimates that the cost of HELP is about $1.2 billion a year, which is made up of around $650 million in deferral costs (ie, there is an interest subsidy on the outstanding debt), about $450 million in debt not expected to be repaid (though only a small % of that is actually written off each year), and about $130 million in discounts for upfront payments and voluntary repayments.

There are also student income support payments, budgeted at $1.8 billion for tertiary education in 2009-10 (ie, includes VET who are about 15% of persons receiving YA). There would also be money flowing via other social security programs to parents of dependent students.

The government says it will spend about $8.5 billion in 2009-10 on research and innovation activities, though not all of this goes to universities. Though always out-of-date, the ABS also produces data on university spending on research and funding sources.

The ABS also produces general education funding statistics, which can be useful for tracking state spending (which is fairly small) but otherwise I do not find it very helpful. It’s done at a very high level of aggregation, which has made it hard for me to reconcile it with data from other sources.

Though as another commenter noted the OECD does also produce spending data, I advise against this source as it is always out-of-date by the time it is published and lacks detail.

9 thoughts on “Government spending on higher education

  1. Had a look at the table. for Law the maximum student contribution is $8,859, with a commonwealth contribution of $1,765.

    So what do these figures mean? Do they mean that the commonwealth gives $1,765 for every law student to the uni, and the uni can only charge to a maximum of $8,859 from the student themselves?


  2. No, the uni gets $10,624. Since 2005 the student charge goes to the university. The student contribution + the Commonwealth contribution = per student funding to the university.


  3. Oh sorry so it works this way:

    I go to Uni to study say Law, the University gets the first $1,765.
    The University then has a choice? to charge up to an additional $8,859.
    The commonwealth will lend me that money under Fee-Help to pay the Uni?

    If this is right, aren’t we already at a defacto Voucher scheme then?


  4. They’ll lend you the money under HECS-HELP (though you never see it; they pay it straight to the uni). The uni can set any student contribution up to the legislated maximum, in practice they all charge the maximum.

    There will be a voucher system from 2012, but not now. With some flexibility for unis at the margins, the government still sets the number of student places a university can provide.


  5. Ok got it. And we’re not really at a voucher system yet because the govt. sets the number of positions.

    Thanks for the clarifying.

    I think the sooner we get some sort of voucher system the better , at the moment uni’s are terribly indifferent and unresponsive to australian students- just go to any enrolment day, they are just so unhelpful.


  6. “And we’re not really at a voucher system yet because the govt. sets the number of positions”
    I think you’ll find this won’t make much differences even if it gets there, as most universities take as many students as they can into most courses as there are economies of scale (basically, they set a cut-off for quality and get as many as possible after that). For courses that are expensive to run, either universities get rid of them, or limit them severely. The only thing that will make a difference is if universities can charge on top of the voucher, in which case the situation will be different to now.


  7. Conrad’s right – with under-priced vouchers, the most likely outcome, improvements are unlikely. Indeed, it could get worse for Australian students if unis cut loss-making courses.


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