Do Tertiary Subsidies affect Tertiary Accessibility?

Earlier this year the Grattan Institute published Graduate Winners, a report which suggested that government subsidies for tertiary education should be cut, given the already strong incentives to pursue higher education, and the low net public benefits that students of certain disciplines accord to society.

To paraphrase, the private benefits that a person gains from attending university, for example, their future income as compared to someone without tertiary qualifications, is large enough to motivate higher education, even if today’s government subsidies were cut. Therefore students should pay more for their tertiary studies. Government subsidies for higher education therefore seem somewhat redundant when an ample incentive already exists for students to undertake further study.

Some findings from the report which supported this view is that students facing different tertiary fee charges (free higher education, Commonwealth-supported places and international student fees) only varied slightly in the point at which they started to benefit financially from their qualification. This is due to student charges being a small percentage of total lifetime earnings.

Furthermore, although the idea of cutting subsidies raises concerns of disadvantaging students from low socio-economic statuses (SES), data found that SES differences in driving university enrolment is only relevant insomuch as SES differences affect prior school performance. In other words, the strongest predictor of a student’s potential enrolment at a tertiary institution is not their socio-economic background but their previous school results. It is also interesting to note that the same notion was echoed in the past: when the Whitlam government abolished university fees in 1973, there was no great change in the socio-economic backgrounds of university students. The lack of change was partly attributed to low high school retention rates which resulted in many disadvantaged young people without secondary qualifications who never had the opportunity to attend higher education.


Source: Graduate Winners

When asked if raising university fees would deter bright students from low socio-economic backgrounds, Professor Glyn Davis, vice-chancellor of the University of Melbourne stated at the Dream Larger OurSay forum that what deterred students most from university was the unsuccessful completion of high school. Therefore the question of how to make tertiary education more accessible relies much more on our state’s high school program, rather than our universities’ fee charges.

Given this state of affairs, we now have the option of cutting tertiary subsidies while also improving tertiary attendance. If students should pay more for tertiary education, then the subsidies cut can be spent elsewhere – namely high school education. In doing this, we can improve tertiary enrolments, while raising student contributions.

The current situation of government schools within Victoria and across the nation introduces a plethora of other problems to be explored. In subsequent articles, the demand for and retention rates of high schools will be briefly discussed, as well as its implications for tertiary enrolment and whether redirecting tertiary subsidies to schools’ funding is justifiable with respect to public benefits.

1 thought on “Do Tertiary Subsidies affect Tertiary Accessibility?”

  1. ‘[T]he strongest predictor of a student’s potential enrolment at a tertiary institution is not their socio-economic background but their previous school results’.

    Does this result hold for jurisdictions without income contingent loans e.g. US, Canada etc.? Or jurisdictions where lower SES have increased difficulty to access private student loans?

    I think the result that hs results determine university enrolment (where hs results is strongly correlated with SES) is right but doesn’t take into account other micro factors that effect lower SES propensity to enrol such as access to credit.

    Students from lower SES background may have the marks to enrol but if they or their family don’t have the income/assets or ability to access credit to fund their tertiary education having the marks may be a moot point.

    This aversion to enrolment doesn’t really apply to Australia though since everyone does have access to income contingent loans, however I just wanted to make the point reducing government direct funding for tuition (while keeping the income contingent loan support) is not the same thing as removing all government support for tertiary enrolment.

    With respect to the abolishment of university fees in 1973 with the result of ‘no great change in the socio-economic backgrounds of university students’ my guess is the ‘strong correlation between HS results and SES background’ effect was a lot more important than the ‘have marks but no assets/income or access to credit’ effect back then due to not many lower SES having the marks to access university even if they had the asset/income/credit to do so.

    I think you hit the nail on the head when you say it will be more effective to raise enrolment by diverting resources improving HS education outcomes than through direct tuition support.

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