NATSEM: UWA model would lift uni debt for women, disadvantaged

The fee model University of Western Australia will adopt under fee deregulation would see course repayments quadruple in some instances. Shutterstock

The University of Western Australia recently announced its proposed post-deregulation price structure. UWA’s new fee is a flat fee of A$16,000 per year for undergraduate courses, which is significantly higher than existing fees.

UWA is the first university in Australia to provide guidance on actual fee increases. NATSEM has modelled what these fee increases would mean for students if such fees were to become standard across Australian universities.

Shortly after the announcement of the Coalition’s policy, NATSEM modelled a range of pricing scenarios at the University of Canberra. These scenarios included “cost recovery” and a number of larger price-increase scenarios up to 50% beyond cost recovery. Underlying the modelling was the future income graduates could expect to earn through their career and a new higher interest rate (Treasury bond rate) applied to student debt.

The previous NATSEM modelling focused on a selection of University of Canberra courses – nursing, teaching, business and science. The UWA fee structure would represent a significant increase in the cost of studying all these courses, particularly nursing and teaching (roughly A$10,000 more each year). Business and science would increase in cost by around A$6,000 and A$7,000 per year.

Like our previous work, the UWA prices impact lower-pay graduate occupations such as nursing and education. For all courses the impacts are larger for females due to their lower wages and hours worked compared to males. For some degrees with high postgraduate incomes the impact is more modest.

The typical repayment period for a four-year teaching-trained female graduate would increase from an expected 9.2 years (8.8 for males) to 26.5 years (17.7 for males). For a female graduate the total repayments more than quadruple from around A$32,000 to A$143,000.

For nursing graduates, the repayment period for a three-year course would increase from 8.3 years to 24.3 years for a female (7.9 to 15.5 for a male). Increases in repayment periods and total dollar repayments are not quite as significant for science or business graduates.

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A further implication for (mostly) female students will be that under such a pricing structure their repayments for popular courses such as nursing and teaching will mean they will still be paying off their degrees well into their forties rather than completing repayments at around 30. For many women the extra repayments will compound the already very high effective tax rates that they face from the combined impact of personal income taxation, child-care costs and the loss of government benefits as they return to work after having children.

The recent AMP.NATSEM report Child Care Affordability in Australia estimated that in transitioning back to a full-time job the typical woman only keeps around 40 cents in the dollar of her gross wage. Continuing to pay off a university debt while juggling work with children will push this down by up to a further 8 cents in the dollar, making work less financially attractive.

In spite of the likelihood of large fee increases and longer repayment times, the payoff from university degrees should be expected to remain higher than the costs for many graduates. However, for women in lower-paid careers such as nursing and teaching, particularly where the mother is a single parent or takes long breaks from full-time employment, the benefits of a university education are likely to be severely diminished from a purely financial perspective.

UWA does not provide teaching or nursing undergraduate courses; these fields are offered through postgraduate studies. Given the lower income profiles of nursing and teaching compared to other fields of study (around 10 to 15%), it is quite likely that such courses would never be paid off. By the end of a five-year study period (undergraduate plus masters) the student will have an accumulated debt approaching A$100,000. For relatively low -paid nursing and teaching graduates this debt will likely continue to grow for many years since the interest on that debt will outpace legislated HELP repayments.

Setting fees as high as A$16,000 per year will mean that debt will take many more years to pay off. Groups most likely to be impacted by these fee increases with significantly larger debts and repayment periods (possibly never repaying) include women in lower-paid professions such as nursing and teaching, those undertaking postgraduate studies, parents working part-time while raising children, and mature-age students.