Hepi director: we could learn from Australian funding system

Policymakers urged to learn lessons from ‘advanced’ overseas model

April 24, 2014

Higher education policymakers in the UK should pay much closer attention to Australia’s funding system, which is “often ahead” of England’s, the director of the Higher Education Policy Institute has said.

Nick Hillman, who was special adviser to universities and science minister David Willetts from 2010 to 2013, was speaking ahead of the publication of a Hepi pamphlet he has written comparing student funding in England and Australia.

He said that Australia was the country with the most similar system to England’s, but Australian policymakers had typically paid greater attention to English developments than vice versa.

As an example, Mr Hillman said the decision, announced in chancellor George Osborne’s Autumn Statement, to uncap undergraduate enrolments in England had taken almost no account of the Australian experience of doing so in 2012.

Rather, it had been driven primarily by Mr Willetts’ pamphlet, published in October, marking the 50th anniversary of the Robbins report by praising its advocacy of undergraduate expansion and urging further expansion, he said.

“But the [policy] isn’t going to be implemented until the autumn of 2015, so it is not like there isn’t time to learn from Australia,” he added, noting that Mr Willetts visited Australia earlier this year.

Mr Hillman said that Australia had also been ahead of the UK in the debate around student migration. He said that after having similar debates about immigration, it had ended up “with a more liberal regime on things like [permission for] post study work”.

Mr Hillman suggested that the review of postgraduate funding announced by Mr Osborne in last month’s budget should examine Australia’s Fee-Help scheme: a branch of its income contingent loan system available to all students not enrolled on state-subsidised courses. The cost to taxpayers is minimised by a 25 per cent surcharge imposed on undergraduate borrowers.

Postgraduates are not charged, though Mr Hillman said any English version of the policy would require a surcharge if it were to be cost neutral to the government.

University Alliance chief executive Libby Hackett, who has written a longer analysis to accompany Mr Hillman’s, said Fee-Help should be seen as a “proof of concept” that a cost neutral loan scheme was possible. As well as postgraduates, she suggested it could also be offered to students at private providers and those studying second degrees at the same level as their first (known as ELQ students). She said that forthcoming University Alliance proposals for England’s funding system would set out a range of options to achieve cost neutrality.

She also praised Australia’s use of three different fee caps, based on the cost, returns and national priority of each course. This gave the government more control over where public funds were invested.

Ms Hackett said the lower proportion of student debt that had to be written off by the Australian government offered lessons for England.

It was achieved because student borrowing there was lower but also because repayment rates were higher once a similar earnings threshold was passed. It meant the balance between public and private contributions to the cost of higher education was more transparent, leading to a stronger “social contract” between students and the state.


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Reader's comments (1)

Australia invented the 'income contingent contribution' concept, a much better way to see the student contribution. When Dearing Cttee first debated the principle in 1996 the lifetime earnings advantage due to a degree was £400k. That made free HE a huge subsidy to the middle classes, and limited expansion. So the principle was right. But the practice is wrong - it should not be a fee or a debt, but a tax - progressive, so the more you earn the more you contribute to enable others to benefit as you did. The lifetime earnings advantage is much less now, and students should contribute accordingly. Some of us on the Dearing Cttee urged the 'graduate tax', but ran out of time to consider it. The Report recommended it for future consideration. It got it in 2004, when there were advocates in both DfES and Treasury, but Blair did not want a 'tax'. The financial accounting of 'loans' at govt level also got in the way of a rational and fair approach. And we still do not have a good and fair solution, and evidently it doesn't even provide the necessary funding. Time to reconsider the 'graduate tax' again?

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