The myths of university deregulation

I don’t usually watch Q&A, but when I do it’s when Christopher Pyne gets such a grilling that happy Twitter users suspect the cleaners will have a long night removing the sweat stains off his seat. He was given some respite, however, when university students in the audience cut off the panel to express their views via repetitive syncopation: “No cuts, no fees, no corporate universities!” Instead of the debate I had tuned in to see, I got awkward television and a pre-recorded performance by Katie Noonan.

This is not the first time my anticipation of enjoyment has been spoilt by people lobbying – rather ironically – on my behalf. Earlier this year I had hoped to enjoy a lunch date with a friend on South Lawn, but was unfortunately driven away when loud speakers started shrieking that Tony Abbott was going to make us pay more.

I can’t say I approve of these methods, though their message is undoubtedly important. Yes, the Coalition wants to further deregulate universities, and yes, conversation is important, but the debate is most concerning because some of its own concerns are misguided.

Misconception #1: students can’t pay for university

The demand-driven funding system introduced under the Gillard government meant that caps on the number of university places were abolished, allowing universities to address unmet demand and hence provide greater access to tertiary education. This led to all bachelor’s degrees becoming CSPs (Commonwealth Supported Places), creating a significant fiscal burden on the government.

With the announcement of the budget on Tuesday, university students have been labelled ‘losers’ and face increases in student contributions as the government cuts funding to universities. Is it fair to say that students will be hit with a debt that they can’t afford to pay back, and that others are better placed to subsidise their university education?

Over their lifetime, the median female bachelor’s degree holder earns $800,000 more than the average Year 12 graduate who undertakes no further study. For men, this income gap is $1.1 million. This difference in income is more than enough to pay for a full-fee degree. In addition, studies conclude that the breakeven point – the point at which graduates start to benefit financially from their degrees – changes only slightly for people who received free higher education (in the 70s), receive a CSP, or pay international student fees. Such research raises questions as to the sensitivity of university students to price changes and their willingness to pay for higher education. In general, tertiary fees are a small percentage of total lifetime earnings, thus demand for higher education is relatively price inelastic.

If university students should continue receiving subsidised education, then who is in the best position to pay? Should it be the student, or the public? The answer usually depends on the discipline and whether it confers a high public benefit. Education relating to social services, for example, has not been a target for fee increases. Disciplines like law and accounting are most likely to be hit with fee increases due to the high demand for these degrees and their relatively lower public benefit compared to other degrees.

Misconception #2: deregulating universities excludes people from low SES backgrounds

The strongest indicator of whether a person enrols in tertiary education is not their SES background, but their prior school performance. Lowering the cost of higher education may not necessarily increase access for people from low SES backgrounds. Therefore, people who are concerned about accessibility might do better to focus their attention on school performance rather than lowering university fees.

When higher education was free under the Whitlam government, student enrolments increased without really changing the socioeconomic distribution of university students. Eighty per cent of the increased enrolments were from people already most likely to attend university, based on their socioeconomic backgrounds.

It has been suggested that SES backgrounds affect tertiary enrolment to the extent that they affect prior school performance. This is plausible and makes intuitive sense, as students with lower SES backgrounds have less access to better primary and secondary educations and thus are less likely to do well in school and consider higher education. By contrast, students from lower SES backgrounds who do well in school are highly likely to go on to university.

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The review of the demand-driven system recently released by the government indicates that deregulation of universities allows them more freedom to provide different programs. These include bridging or preparatory courses which will benefit students who have previously performed poorly at school. Data indicates that students with low ATARs (around 60) are less likely to complete their degrees and will benefit from programs which can offer more intimate and attentive teaching styles. To the extent that low SES correlates with poor prior school performance, deregulation will actually benefit these students.

In addition, deregulation allows universities to offer more places and there has been evidence of an increase in enrolment for students with low ATARs. The flip side is that university students are bearing the burden of paying for more accessible higher education.

Misconception #3: deregulation compromises the excellence of Australian universities

On the other side of the debate there has been concern that allowing universities to open their doors and meet the demands of students with lower ATARs sacrifices the excellence of the university system.

The review of the demand-driven system found that deregulation often allowed universities to innovate by offering new programs and encouraged competition between universities. Abolishing caps on student numbers mean universities can offer new courses without having to discontinue another program so as to fix total student places, thus giving an impetus to higher education providers to increase the quality of their teaching.

In addition, it was also found that students with low ATARs, but who enrol at university via a pathway program, might actually perform better than students who enter directly. The belief that deregulation reduces excellence is therefore a crude one.

Figure 2 is from a university that doesn’t accept direct entry from students with ATARs below 70, but does accept them if they come via a pathway program. It shows that students with low ATARs can perform better than those with higher ATARs. With deregulation of universities, such pathway programs can become much more common, and will increase access to university without compromising excellence.

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Image: ‘Melbourne University cloisters’ by Geoff Penaluna: https://flic.kr/p/6Q7NuJ. Licence at https://creativecommons.org/licenses/by/2.0/. by