Fee receipts become coffer-fillers

January 27, 1995

Australia's unique system of deferred tuition fees is expected to provide almost A$1 billion (Pounds 500 million) for universities this year, or about 15 per cent of institutional revenues.

Introduced in 1989, the Higher Education Contribution Scheme offers students the choice of postponing tuition payments until they graduate, or paying on enrolment at a 25 per cent discount.

Increasing numbers of students are now paying the HECS charge of $2,400 (less 25 per cent) when they enrol and the income generated from this source, along with voluntary repayments, is likely to exceed $250 million in 1995.

In a sharp rise on 1993, 138,000 students, or per cent of those liable for HECS, paid the fee upfront last year, presumably because of the government's decision to boost the discount from 15 per cent to 25 per cent. The fee represents about one fifth the average cost of tuition.

Growing numbers of students who have graduated since the scheme began in 1989 are now having to repay the charge through the tax system. Most students will owe at least $7,000 by the time they complete their three-year degrees.

More than 500,000 Australians were liable for HECS in 1994, a 30,000 increase on the previous year. Among those exempt from paying the charge were 22,300 students on postgraduate scholarships and 3,900 teachers undertaking professional development or upgrading courses.

When the government established the deferred option scheme six years ago, it had to provide most of the inital money due to the universities. By 1991, receipts from upfront and voluntary payments, plus the additional tax being paid by new graduates, had reached $130 million.

This year, the government expects HECS receipts to total more than $500 million, about half the amount it must pay to institutions under the scheme.

And with universities generating increasing amounts of their own income, the proportion of Commonwealth spending on higher education is falling. In the mid-1980s, institutions raised a mere 12 per cent of their annual budgets from non-Commonwealth sources. From 1988 on, they came under pressure to become more self-sufficient.

By 1992, Commonwealth grants amounted to less than 60 per cent of university operating revenues with HECS then contributing 13 per cent. Fees and charges were earning more than 10 per cent, and donations, investments and bequests 5 per cent. Many universities are close to getting more than half their income from non-federal sources.

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