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The problem with Commonwealth ‘scholarships’

Commonwealth scholarships sound like a good idea, but they’ve been mired in controversy over how they will be doled out. Shutterstock

Equity scholarships usually attract general support as a “good thing”. It therefore seems surprising that the Coalition’s proposed new Commonwealth scholarship scheme should generate so much contention if not opposition.

Once government scholarships, now government loans

The first problem with the new scholarships is that they are meant to compensate for the Coalition’s proposed cut of $800 million from existing scholarships over five years. The government proposes to restrict eligibility for the current relocation scholarships, which are from A$1,036 to A$4,145 a year, and to convert to a loan the current start-up scholarship of A$2,050. These scholarships are needed because the Youth Allowance, Austudy and Abstudy are tied to unemployment benefits, which are far too low to support their recipients in either study or job seeking.

The director of equity at Queensland University of Technology, Mary Kelly, notes that converting equity scholarships into loans would result in the poorest students leaving university with more debt than their high-income counterparts in the same programs. Kelly describes this as

one of the worst public policy ideas ever, and deserves to be strongly rejected by the Parliament.

How do you calculate the scholarship funds?

A second problem is the way the funds for the scholarships would be calculated. The Coalition proposes to require institutions with more than 500 students to allocate to the new scholarships 20% of any additional revenue they generate from charging higher fees. As Innovative Research Universities observes, the calculation is complicated and it can’t be made from published information.

The University of Western Australia’s Deputy Vice-Chancellor (Education), Alec Cameron, states that the highest proportion of his university’s enrolments are in science and engineering. Their fees would need to increase to more than A$14,200 just to make up for the proposed government funding cuts. Since the university is proposing a flat fee of A$16,000 a year for all undergraduate students, only A$360 per science and engineering student would need to be allocated to scholarships.

Calculating scholarship funds could get tricky. Flickr/KyleBaker, CC BY

However, since the current fee cap for humanities is much lower and the Coalition plans to increase its subsidy of humanities subjects, UWA’s flat fee of A$16,000 would result in over A$2,000 per humanities student being allocated to scholarships.

These and similar calculations lead students to ask why they should pay higher fees to support other students whose scholarships the government has cut. Such redistribution has been routine in university scholarship programs for centuries and in government programs generally, but rarely is it so explicit.

Also, as Conor King commented in The Conversation, the scholarships would redistribute funds according to students’ (past) background rather than their future income, which is the basis of HELP loans.

A third problem is the name: New Commonwealth Scholarship Scheme. It seems trivial, but by calling them ‘New Commonwealth Scholarships’ the Coalition is emphasising that these would compensate for its cuts to government scholarships and suggests that these are national rather than institutional scholarships.

A national pool, or each for their own?

This in turn leads the Regional Universities Network, Innovative Research Universities and others to propose that scholarship funds be pooled nationally and allocated to institutions with the most equity students. This seems reasonable because universities with apparently the most capacity to increase fees enrol the lowest proportions of equity students while universities with apparently the least capacity to increase fees enrol the highest proportions of equity students.

Will the scholarships reach those who need them the most? Flickr/Nottingham Trent University, CC BY

Thus the universities of Melbourne and Western Australia admit only 6% to 9% of their students from a low socio-economic status background, far below their 25% share of the general population. Federation and many other regional universities enrol around 24% of their students from a low socio-economic status background.

Reallocating scholarship funds through a national pool would be reasonably straightforward to administer, as Innovative Research Universities shows. However, it would extend the redistribution of fee revenue to a second level, not only between students in the same institution but between students in different institutions.

Are there any alternatives?

The UK government took a different approach when it almost tripled its fee cap to the equivalent of $A16,649 a year from 2012. It requires all institutions that propose to charge fees above the basic level to have an access agreement approved and monitored by a newly created Office for Fair Access.

Such an approach could readily be incorporated into the Australian government’s higher education participation and partnerships program. However, while access agreements were introduced by the UK Conservative coalition, the Australian Coalition government is not attracted to increasing regulation of access to offset its deregulation of fees. Indeed, it has reduced regulation in its revised higher education participation program.

For ideological reasons, the Coalition seems unlikely to accept pooling. A more acceptable compromise might be for the Commonwealth to take a proportion of institutions’ extra fee revenue to preserve current Commonwealth relocation and start-up scholarships.

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