Wizard way to fund Oz universities

March 27, 1998

ACCESS to education is perhaps the greatest key to equitable social mobility and the breakdown of the class division still evident in Britain. It is reasonable to ensure that those who benefit most immediately from education contribute some of the cost, and, certainly, Britain's universities must be properly funded.

Introduction of Australia's Higher Education Contribution Scheme in the late 1980s sparked student concern and unrest. A decade later the scheme has strong support in Australia and is being floated by the British government as a model for helping to fund tertiary education.

University education was made free in Australia in the early 1970s, apart from a fee of about Pounds 150 a year for student union amenities. The number of students increased steadily throughout the 1980s and rising costs became an increasing problem for the federal government. As in Britain, there remains a widespread expectation that university education be accessible to all on the basis of academic merit. HECS, at least in its original form, proved a popular and just way of ensuring that students contribute part of the cost of their education.

Graduates, and those who fail to graduate, pay back their debt through taxation once they begin to earn a salary slightly less than the average wage. Alternatively, there is a 25 per cent discount for paying the fee before the beginning of each term. A large majority of students elect to pay the charge through the taxation scheme rather than up front. Students are not charged interest on the debt but the amount is indexed to inflation. Those studying part-time are charged proportionately less per term and the charge is levied regardless of whether or not the student passes. Should a student die the debt dies with them.

The original HECS charge of about Pounds 1,000 per year of study was levied upon virtually all students. Nursing courses were exempted to encourage people on to them.

The fee has recently been increased by the Howard government to about Pounds 1,500 for courses in the arts, social studies and now nursing. The charge increases on a sliding scale up to Pounds 2,200 for courses seen as expensive or where there is great competition for places and perception of a high earning potential such as medicine, law and dentistry.

The failure of efforts to manipulate choices through adjustment of charges is a clear indication of the greatest advantage of HECS: the imposition of the scheme appears to do very little to discourage students from studying the course they are most interested in or from studying at all. A decade after the scheme commenced, it can be seen that the exemption of nursing, and the awarding of the occasional exceptional student in other courses with "HECS exemption scholarships" has had little effect on student numbers or study decisions.

As a doctoral history student at the University of Melbourne, I have accrued a HECS debt of some Pounds 5,000 since 1990. Given the other, usually considerable, costs of university education such as housing, food and income for study, a future, temporary increase in tax (currently 3-6 per cent) is hardly a significant disincentive to enrol.

Indeed, in Australia, the number of students in further education has climbed since the introduction of HECS. However, one small group of students was adversely affected by HECS - older employed women, usually studying arts courses, frequently doing so part-time. Because they were already earning a salary over the HECS payment threshold, they were immediately liable to pay higher taxes if they studied. Once these people were to be forced to pay to further their study interests some of them left the universities.

For a decade or so, HECS has ensured that access for Australians to Australian universities has been entirely based upon academic merit, usually determined solely on the basis of state-wide ranking at the end of secondary school. The more prestigious universities have frequently argued that just as they are allowed to charge full fees to overseas students, they should be able to do so for local students, particularly those who are not sufficiently able to enter through the merit-based system.

The less prestigious institutions are well aware that parents who are able to afford high fees to gain their child access to a university are much more likely to send their child, and therefore their money, to the more prestigious institutions. In its first term of office, the conservative government granted universities the right to charge local students upfront fees.

The charging of upfront fees, no matter how small, is an infinitely greater threat to academic standards and equitable access to tertiary education than a HECS-style graduate taxation scheme.

Michael Thorne is a visiting student at Corpus Christi, Oxford.

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