Academic journal article Journal of Australian Political Economy

Are University Students Paying Too Much for Their Education in Australia?

Academic journal article Journal of Australian Political Economy

Are University Students Paying Too Much for Their Education in Australia?

Article excerpt

The Review of Australian Higher Education, released in December 2008, saw a need to 'provide sufficient funds to support the numbers [of students] we agree should be participating; [and to] ensure that the benefits of higher education are genuinely available to all' (Bradley Review 2008: xiii). The Minister for Education, Julia Gillard, subsequently announced that the Australian government wanted to boost participation in higher education by supporting people from disadvantaged backgrounds. The government aims to lift low socioeconomic status (SES) enrolments by 55,000 in 2020 (2009-10 Budget).

This article examines the current Higher Education Contribution Scheme (HECS) in Australia and its impact on higher education. It suggests that Australia's current higher education funding model does not sufficiently encourage students to pursue higher education. In many cases students' payments are greater than the real costs of their courses or benefits they are likely to receive. We propose a different structure in the levels of contributions to higher education funding that may be more successful at achieving the goals identified by the Bradley Review and Gillard, thereby creating a more equitable system that would provide more opportunities to access higher education in Australia.


The Higher Education Contribution Scheme (HECS) was conceived by the Wran Committee, set up by the Federal government in 1988. The government of the time--an ALP government led by Bob Hawke--followed its recommendation of abolishing the policy of 'free education' and, in 1989, implementing the Higher Education Funding Act 1988. The objects outlined in Sect 2A of this Act were to:

a. support a higher education system that:

* is characterised by quality, diversity and equity of access;

* contributes to the development of Australia's cultural and intellectual life;

* is appropriate to meet Australia's social and economic needs for a more highly educated and skilled population;

b. strengthen Australia's knowledge base and enhance the contribution of its research capabilities to national economic development, international competitiveness and attaining social goals.

The movement away from 'free education' and introduction of HECS saw a reduction in the proportion of higher education funding provided by the Commonwealth Government and shift to a greater contribution by students. Table 1 shows that, in 1981, during the period of 'free' higher education, the contribution made by the Commonwealth Government towards the funding of universities was 82.9 percent of total university income. After HECS was introduced in 1989 the Commonwealth Government's contribution fell to 66.7 percent of total university income. Meanwhile, the contributions made by students as a proportion of total university income rose from 2.3 percent in 1981 to 16.3 percent in 1989.

In 1989 the government introduced an income contingency scheme as part of the higher education funding model. The income contingency scheme provided students with the capacity to defer their payment of university fees until they were earning income, usually on completion of their degree. The students were required to pay their fees through the taxation system when their incomes reached a certain threshold. The introduction of the income contingency scheme in the form of HECS provided students with the options of either paying 'full up-front', or deferring all or part of their HECS with the option of 'partial up-front' payment.

Students deferring part or all of their HECS liability were required to 'take out a loan' with the Commonwealth Government. Students who paid 'full up-front' received a 25 percent discount, as did students with a 'partial up-front payment' of $500 or more. Only when the income of HECS debtors reached the compulsory repayment threshold were they required to repay the loan. …

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