tag:theconversation.com,2011:/uk/topics/cost-of-a-degree-16054/articlesCost of a degree – The Conversation2022-08-17T16:02:50Ztag:theconversation.com,2011:article/1859992022-08-17T16:02:50Z2022-08-17T16:02:50ZHow England plans to cut back ‘low value’ degrees so it can reap more student loan repayments<figure><img src="https://images.theconversation.com/files/479360/original/file-20220816-25-yviwip.jpg?ixlib=rb-1.1.0&rect=8%2C0%2C5722%2C3823&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/multiracial-students-walking-university-hall-during-688627174">4 PM production/Shutterstock</a></span></figcaption></figure><p>Rishi Sunak, one of the candidates to be the UK’s next prime minister, has vowed to “<a href="https://www.independent.co.uk/news/uk/higher-education-liz-truss-winchester-college-russell-group-british-b2139918.html">crack down</a>” on university degrees with poor career outcomes. This is not a new idea. The university regulator in England, the <a href="https://www.officeforstudents.org.uk/">Office for Students</a>, has already proposed setting <a href="https://www.officeforstudents.org.uk/media/bc30a153-8c13-49b8-89f8-26ab0276d09d/setting-numerical-thresholds-for-condition-b3-corrected.pdf">minimum thresholds</a> for the proportion of graduates from each course that should be in jobs it defines as highly skilled. </p>
<p>A course that does not meet <a href="https://www.officeforstudents.org.uk/advice-and-guidance/regulation/registration-with-the-ofs-a-guide/conditions-of-registration/">the regulator’s expectations</a> could be prevented from recruiting publicly financed students. The thresholds the Office for Students has proposed are that 60% of people completing their first full-time degree should be in highly or skilled jobs or further study within 18 months of completing the course. For full-time masters students, the proposed proportion is 70%. The final levels will be confirmed in September. </p>
<p>Students, of course, do not go to university for their career prospects alone. They are motivated by interest in their subject, and by the social, cultural and sporting opportunities at university. They look for the personal growth that comes from meeting new people in a different place. </p>
<p>What’s more, after university graduates are <a href="https://www.bbc.com/worklife/article/20220720-the-case-for-job-hopping">moving between jobs</a> or even careers more than their parents did. In this context, the government’s focus on graduate employment may seem strange or shortsighted. </p>
<p>The reason for this focus lies in the financing of English higher education and how much it now costs the government. In 2012, the government tripled the level of <a href="https://commonslibrary.parliament.uk/research-briefings/sn05753/">undergraduate tuition fees</a> up to £9,000 per year. This was made possible by switching grants to universities into government loans to students. These are currently repayable by graduates as a proportion of their salary above an earnings threshold, then written off if they are not fully repaid after 30 years. </p>
<p>Alongside this, the government promoted competition, with the promise that universities would become more responsive to <a href="https://www.gov.uk/government/consultations/higher-education-white-paper-students-at-the-heart-of-the-system">students as consumers</a>. It removed controls on recruitment, brought new universities into the system, and <a href="https://www.legislation.gov.uk/ukpga/2017/29/contents/enacted">established</a> a market regulator – the Office for Students. </p>
<h2>The cost of education</h2>
<p>In this more competitive system, it was expected that students would only be willing to pay higher fees for courses leading to higher earnings. The more these students went on to earn as graduates, the more likely they would be to pay back their student loans in full. </p>
<p>Other courses would need to charge lower fees or students would decide not to go to university at all. The system would manage demand for higher education and maximise the repayment of loans, controlling the costs to government. </p>
<p>However, despite government expectations, most universities have charged the highest fees since 2012 across most subject areas, recognising that lower fees could signal poor quality and deter students. Most <a href="https://www.ucas.com/corporate/news-and-key-documents/news/record-levels-young-people-accepted-university">young people</a> have not been put off by higher fees, even for courses with lower graduate earnings. This is because they have wanted to go to university for reasons beyond their career prospects alone. </p>
<figure class="align-center ">
<img alt="Two students looking at laptop in dark library" src="https://images.theconversation.com/files/479361/original/file-20220816-3340-5eioce.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/479361/original/file-20220816-3340-5eioce.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=338&fit=crop&dpr=1 600w, https://images.theconversation.com/files/479361/original/file-20220816-3340-5eioce.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=338&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/479361/original/file-20220816-3340-5eioce.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=338&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/479361/original/file-20220816-3340-5eioce.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=424&fit=crop&dpr=1 754w, https://images.theconversation.com/files/479361/original/file-20220816-3340-5eioce.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=424&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/479361/original/file-20220816-3340-5eioce.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=424&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Students don’t necessarily go to university just to get a good job.</span>
<span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/university-library-two-gifted-girl-students-1752957962">Gorodenkoff/Shutterstock</a></span>
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</figure>
<p>In 2012, the government did not need to count any loan write-off within its accounts until it happened, so it was a problem it could defer to its successors. In 2018, though, the Office for National Statistics <a href="https://www.ons.gov.uk/economy/governmentpublicsectorandtaxes/publicsectorfinance/articles/newtreatmentofstudentloansinthepublicsectorfinancesandnationalaccounts/2018-12-17">decided</a> that the proportion of loans expected to be written off should count immediately towards the balance of government spending on higher education. </p>
<p><a href="https://researchbriefings.files.parliament.uk/documents/CBP-7973/CBP-7973.pdf">By 2020</a>, the government expected to write off more than 50% of the value of student loans, compared with around 30% when fees were increased in 2012. Before the 2012 reforms, the annual cost of higher education participation to the government was £7 billion, and the change in financing was expected to save £3 billion. Instead, the annual cost increased to £10 billion in 2020. </p>
<p>Alongside other <a href="https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/1057092/HE_reform_command-paper-print_version.pdf">measures proposed by the government</a> to change the terms of loans, graduate employment thresholds are intended to address these rising costs. They cut out funding for courses less likely to repay loans. </p>
<h2>Course closures</h2>
<p>This focus on graduate outcomes has <a href="https://www.telegraph.co.uk/news/2022/06/26/english-literature-course-suspended-university-poor-job-return/">led to concerns</a> that future regulation is causing course closures, particularly in the humanities. </p>
<p>It is more likely, though, that these closures are due to competition. <a href="https://www.ucas.com/data-and-analysis/undergraduate-statistics-and-reports/ucas-undergraduate-releases/applicant-releases-2022-cycle/2022-cycle-applicant-figures-26-january-deadline">The latest data</a> shows that humanities applications from students in England reduced by 5% between 2019 and 2022, compared with an increase of 15% to applications overall. </p>
<p>Due to their lower fixed costs and space requirements, there are better financial returns to humanities courses than many other subjects and it is easier for more popular universities to expand them. This means that others rapidly lose students and become unsustainable. </p>
<p><a href="https://link.springer.com/article/10.1007/s10734-016-0016-x">Experience worldwide</a> suggests that the interests and aspirations of young people and their families drives higher education expansion. Every August, as students in England receive their examination results, ministers become more concerned about ensuring sufficient places for them than controlling the system. This is because capping higher education is an unpopular constraint on ambitions. It is student demand that shapes higher education, and regulation is unlikely to change this.</p><img src="https://counter.theconversation.com/content/185999/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Chris Millward worked for England's higher education funding and regulatory agencies during the period described in this article. He was Associate Director and Director of Policy at the Higher Education Funding Council for England from 2008-17 and then Director of Fair Access and Participation at the Office for Students from 2018-21, </span></em></p>Course closures have more to do with student demand than government regulation of employment outcomes.Chris Millward, Professor of Practice in Education Policy, University of BirminghamLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/536542016-01-28T04:21:12Z2016-01-28T04:21:12ZQuality, free university education is necessary – and possible<figure><img src="https://images.theconversation.com/files/109204/original/image-20160126-19645-bf35e1.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Students demand free access for all at the University of Cape Town in South Africa.</span> <span class="attribution"><span class="source">Mark Wessels/Reuters</span></span></figcaption></figure><p>There have been some disquieting contributions to the debate about South Africans’ right to access quality public university education. Some suggest that it is <a href="http://www.news24.com/SouthAfrica/News/free-higher-education-for-all-impossible-nzimande-20151203">unsustainable</a>. Such people insist that fee payments are unavoidable. Making free, quality university education available to all would impose a <a href="https://theconversation.com/free-education-is-a-worthy-goal-but-south-africa-isnt-ready-for-it-yet-49414">greater burden</a> on the economy, and will only benefit students who can already afford to pay, we are told.</p>
<p>As academics working at South African universities and a student involved with the <a href="https://theconversation.com/south-african-student-protests-are-about-much-more-than-just-feesmustfall-49776">#FeesMustFall</a> movement, we wish to take issue with such perspectives by locating the discussion in its proper context. </p>
<h2>“Limited resources” are no excuse</h2>
<p>Any discussion about the provision of health, education and similar public and social goods is unavoidably about a view of society and transformation. The same is true of any discussion about the funding of education as a public good. Many corporatist discourses on the subject talk about the “costs and benefits”, “rates of return” and the “economics” of education. These are predicated on a particular reading of the value and purposes of education. </p>
<p>Such perspectives attempt to limit the state’s capacity in favour of market mechanisms, among them “public-private partnerships”. This approach is merely a way of inserting the agendas of private appropriation and accumulation into the domain of public good. It has allowed the evolution of what has become a global “education industry”. It has led to the rise of corporate empires intent on commodifying education.</p>
<p>One common argument against universal free university education is that there are only “limited resources” available for public systems. And yet there are always resources for other choices made by government. These include the purchase of weapons, vanity projects such as World Cup soccer stadia and costly investments in non-renewable energy generation. It’s apparent that the idea of “limited resources” is based on a particular line of reasoning derived from conservative economic thinking. The present funding approaches are selective and limited. They do not address the country’s structural inequalities. Instead they increase social divisions and continue the exploitative practices of apartheid capitalism. </p>
<p>What, then, is a useful approach to the question of funding the full cost of public higher education? </p>
<p>It depends, in our view, on a number of prior values and principles and the assumptions underpinning these. Very importantly, society as a whole is implicated in a discussion about the choices made about the provision of public services. These choices should not be preempted by discussions about the quantum of fiscal and other resources. </p>
<h2>The alternatives</h2>
<p>What are we are proposing as alternatives to the status quo?</p>
<p>Firstly, a conceptual framework must be established around which practical possibilities can be built. Public will and democratic accountability needs to be mobilised. All people must be given the space to think more deeply about universal, free and quality public education as a constitutive condition for democracy and the public good. It is already possible to begin this process at universities and elsewhere through events devoted to robust and critical dialogue.</p>
<p>Universities and similar public institutions have a responsibility and a significant role to play in guiding discussion about the criteria for framing public choice. They can help people to understand how public funds are spent. Importantly, they can provide spaces where the views of those marginalised and excluded can be recognised and heard. Institutional decision making must be democratised beyond its limited managerial forms. </p>
<p>The fiscal debate must be opened up so that everyone can see what sources of funding can be immediately made available. These could examine, for instance, past and present models of universal free education globally. They might also explore the possibility of expanding the State’s revenue base through wealth and other redistributing taxes.</p>
<p>There will also need to be discussions about what sort of detailed research is needed to pave the way for universal, free and quality public education. These and other strategies informed by alternative social, political, economic and cultural choices could lead to a humane society where the potential of all its citizens will be realised.</p>
<h2>A public good</h2>
<p>Education as a public good should be regarded as essential to the development of citizens in a democratic society. Public resources must be used in ways that can support and engender ideas and practices which enhance cooperation, collegiality, social sharing, social responsibility, caring and social equalisation. </p>
<p>This sort of education can help to reconceptualise the goals of a socially just society. It can reorganise social relations more fundamentally than the current system does. </p>
<p>The goal of public quality education is to bring all of society, not just the “historically disadvantaged”, into the process of social transformation. It involves both those who are wealthy and those in poverty. This allows a process of genuine social reorganisation to start, and enables South Africa to address the structural characteristics of <a href="https://theconversation.com/factcheck-is-south-africa-the-most-unequal-society-in-the-world-48334">social inequality</a>.</p>
<h2>Now is the time</h2>
<p>We realise the enormity of this undertaking. But we also recognise the great potential of the social agency demonstrated by history - such as the end of statutory apartheid. </p>
<p>The time is ripe. Since early 2015 South Africa’s university students and workers have <a href="https://theconversation.com/after-protests-it-cant-be-business-as-usual-at-south-africas-universities-50548">set in motion</a> the processes needed for deep and enduring social change. They have simultaneously defined the critical role that learning and education play in any such change.</p><img src="https://counter.theconversation.com/content/53654/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>The authors do not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Many people dismiss the idea of free, quality public university education out of hand. But there are many ways to make it happen - and it all ties back to the idea of education as a public good.Salim Vally, Director of the Centre for Education Rights and Transformation and Associate Professor of Education, University of JohannesburgEnver Motala, Researcher Social Sciences, University of Fort HareLeigh-Ann Naidoo, PHD Scholar, Wits School of Education, University of the WitwatersrandMondli Hlatshwayo, Senior Researcher in Labour Studies and Education, University of JohannesburgRasigan Maharajh, Chief Director: Tshwane University of Technology - Institute for Economic Research on Innovation; Node Head: DST/NRF Coe SciSTIP; and Professor Extraordinary: Stellenbosch University - Centre for Research on Evaluation, Science and Technology , Tshwane University of TechnologyLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/493842015-10-19T12:24:17Z2015-10-19T12:24:17ZA blanket university fee reduction benefits the wealthy – and slows change<figure><img src="https://images.theconversation.com/files/98835/original/image-20151019-23254-mk7mn3.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Students at Rhodes University in Grahamstown protest against the institution's minimum initial payment, a one-off fee to secure an academic place.</span> <span class="attribution"><span class="source">Madeleine Chaput/Activate</span></span></figcaption></figure><p>I recently sat on an appointment committee at South Africa’s Stellenbosch University where two candidates were being interviewed for a tenure-track position in economic history within the Department of Economics.</p>
<p>The candidates, both Masters students in the department, were passionate, eloquent and thoughtful in their answers. There was no reason not to appoint both. Several members of the appointment committee suggested we do so.</p>
<p>But we couldn’t, because of something called the “budget constraint”.</p>
<p>This week, on campuses <a href="http://www.news24.com/SouthAfrica/News/Rhodes-University-shut-down-amid-nationwide-fees-protests-20151019">across South Africa</a>, students are continuing their protests against higher tuition fees.</p>
<p>Proposed fee hikes are viewed by some as a sinister way to exclude poor students, almost all of them black, from South Africa’s elite universities. This is simply not true: universities are desperate to attract the best talent and to ensure their success. </p>
<p>But it is also true that a <a href="http://www.iol.co.za/news/south-africa/gauteng/wits-suspends-10-5-fee-hike-1.1931596#.ViTNmH4rLIU">10.5% hike</a>, such as the University of the Witwatersrand is proposing, is close to <a href="http://www.tradingeconomics.com/south-africa/inflation-cpi">double inflation</a>. And attending university is already incredibly expensive. By my estimates, at least 95% of South Africans cannot afford the <a href="http://businesstech.co.za/news/general/77079/top-sa-universities-how-much-they-cost/">approximately R100,000 a year</a> that’s needed for tuition fees, accommodation, textbooks and spending money.</p>
<p>To give some context, only 4% of <a href="http://www.econ3x3.org/article/who-are-middle-class-south-africa-does-it-matter-policy">South African households</a> earn R500,000 per year or more. Most students need a bank loan, as did I and almost all of my friends. We were the lucky ones. Many students’ parents simply don’t have the collateral to get loans. </p>
<p>So how should universities balance fee increases with the need to grow their talent pools, specifically of black staff? There are only three other alternatives. </p>
<h2>1. Cut budget items elsewhere</h2>
<p>The first item on any budget – whether for a university, country or household – that is usually slashed in the face of financial pressure is new infrastructure and the maintenance of existing infrastructure. </p>
<p>But many campuses across South Africa already struggle with dilapidated facilities. Infrastructure construction has not kept pace with student enrolment, meaning that students often have to sit on the floor in lectures. There is very little scope in university budgets for further fiscal restraint.</p>
<h2>2. Raise income from third-party sources</h2>
<p>Raising third-stream incomes is a better alternative. But this type of income is often a consequence rather than a cause of excellence. Only the top universities will be able to attract third-stream incomes, either from donors or in collaboration with the private sector. </p>
<p>Donor money is also incredibly contingent: donors want to add their names to new buildings, see their donations spent on sport teams, or pay for bursaries. </p>
<p>Few want to donate money to pay salaries. Third-stream incomes through collaborations with the private sector can provide additional capacity in some industries – like engineering – but even here the effect on the total budget is limited.</p>
<h2>3. Greater transfers from national government</h2>
<p>The only alternative is to increase government funding, which in South Africa <a href="http://bit.ly/1NjYGzW">lags behind</a> what other countries spend on tertiary education. To make things worse, the core subsidy for universities has <a href="http://bit.ly/1NjYGzW">consistently fallen</a> in real terms in relation to student numbers. These have, in turn, risen dramatically and this has skewed the entire model.</p>
<p>Meanwhile economic growth is slowing and tax income is falling. Against this backdrop, South Africa’s Finance Minister Nhlanhla Nene is unlikely to suddenly increase higher education funding. </p>
<h2>A different approach</h2>
<p>The budget constraint is a reality that we cannot wish away. It is a challenge faced by universities across the world. In the South African context it is labelled elitist, racist, capitalist, colonialist and neoliberal. But it won’t disappear. We must find solutions within this constraint.</p>
<p>I don’t think we can afford to relax spending on maintenance while running university facilities into the ground. If we do, we also lose the ability to collect third-stream incomes and this deepens the problem. </p>
<p>Many students are calling for the reduction or total abolishment of fees across the board. But I would argue for better targeted support for poorer students, instead of a blanket reduction in student fees. This is because reducing student fees will benefit wealthy South Africans more than poor South Africans. </p>
<p>How is this possible? Because the wealthy are more likely to access tertiary education. In other words, a blanket reduction in university fees is like a subsidy for the rich (or a tax on the poor). So I would take a different approach and advocate for an increase, not decline, of student fees, say to 25%.</p>
<p>Yes, 25%! This will allow universities to allocate the additional 15% income from these fee increases to provide bursaries for students from poor backgrounds. A multi-tier or sliding scale system – where, for example, those whose parents earn above R500,000 per annum pay R150,000 and those earning less than R50,000 pay R15,000 – is a far more equitable option than scrapping fee increases for all.</p>
<p>And there will be additional funds to appoint black staff, paid for by those who can afford to do so. This will allow universities to <a href="http://www.news24.com/Archives/City-Press/Where-are-our-black-academics-20150430">transform their staff profile</a> faster. A fee reduction, on the other hand, will in all likelihood stall this process of transformation.</p>
<p>A blanket reduction in fees won’t solve the twin problems of slow transformation and access for poor students. In the job interview I spoke about, both candidates were black South African women. The candidate we could not appoint because of limited resources was as brilliant as her fellow interviewee. I say, let’s get a more equitable fee system – and appoint her too.</p>
<hr>
<p><em>This article is based on a piece that originally appeared on the <a href="https://johanfourie.wordpress.com/">author’s blog</a>.</em></p><img src="https://counter.theconversation.com/content/49384/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Johan Fourie does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Fee protests have shut down a number of South African university campuses. The question is, how should universities balance fee increases with their other obligations?Johan Fourie, Associate Professor, Department of Economics, Stellenbosch UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/400092015-04-13T20:26:38Z2015-04-13T20:26:38ZShould all uni students contribute the same regardless of degree?<p>The government has failed with its <a href="https://theconversation.com/university-fee-deregulation-blocked-but-pyne-pledges-to-fight-on-38912">twofold attempt</a> to create a single higher education system <a href="https://theconversation.com/higher-ed-bill-explainer-what-will-pass-and-what-will-be-blocked-31019">in which</a> all providers are government funded with each able to charge students what they wish.</p>
<p>Now we need an open exploration of the various options for the future. Important to such discussions is a better understanding of how university funding is allocated and how much students should contribute.</p>
<p>To do this we have to look at the way universities are currently funded, what students pay, and how the fees would be used if universities were free to charge what they needed.</p>
<h2>How does university base revenue work?</h2>
<p>Universities’ base funding from government is driven by the number of students and the discipline of each unit they study. The intent is to ensure each university gets a reasonable share of the available funding, reflecting how large they are and the likely cost of the mix of areas in which they teach and research.</p>
<p>This table sets out the <a href="https://docs.education.gov.au/documents/2015-indexed-cgs-and-help-rates">current 2015 rates</a>:</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/77612/original/image-20150410-2085-1o3qlmm.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/77612/original/image-20150410-2085-1o3qlmm.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/77612/original/image-20150410-2085-1o3qlmm.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=436&fit=crop&dpr=1 600w, https://images.theconversation.com/files/77612/original/image-20150410-2085-1o3qlmm.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=436&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/77612/original/image-20150410-2085-1o3qlmm.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=436&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/77612/original/image-20150410-2085-1o3qlmm.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=547&fit=crop&dpr=1 754w, https://images.theconversation.com/files/77612/original/image-20150410-2085-1o3qlmm.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=547&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/77612/original/image-20150410-2085-1o3qlmm.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=547&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">These rates are those in use for 2015. They include the government’s proposed efficiency dividend, which it concedes will not pass the parliament. Final rates for 2015 will be slightly higher.</span>
<span class="attribution"><span class="license">Author provided</span></span>
</figcaption>
</figure>
<p>Funding is higher for some disciplines (like engineering) than for others (like business) on the basis that in an efficient world a university should spend more on engineering than on business to produce decent graduates in both. The model assumes broadly similar approaches to a particular discipline across all universities and a focus on sufficient outcomes, not the best possible.</p>
<p>The variation in revenue across disciplines dates back to decisions in the early 1990s. The relevance of the 1990 relativities is increasingly dated: in 1990 engineering used many more expensive machines than business; now the widespread use of computers and related technology has helped narrow the gap. </p>
<p>The <a href="http://www.canberra.edu.au/research/faculty-research-centres/edinstitute/documents/HigherEd_FundingReviewReport1.pdf">base funding review</a> of 2011 concluded that no discipline needed less funding but that some, notably those at the bottom and top of the spectrum, needed more. The Innovative Research Universities (IRU) <a href="http://www.iru.edu.au/media/30179/iru_renewing_%20universitybasefunding_thepriorties_%20feb12.pdf">estimated the minimum cost</a> of its proposals was a 17% increase in government funding.</p>
<h2>What is base revenue for?</h2>
<p>The funding is not “teaching funding”. It is for any purpose the university thinks suitable within the broad functions of teaching, research and use of scholarship. It is important to avoid telling the universities what they should do with the money. </p>
<p>Universities are not expected to spend precisely A$25,618 on each engineering student. They are meant to use the overall revenue to best teach the students they enrol and support research and other activities. </p>
<p>The allocation system strongly influences what universities spend. Hence it is not easy to answer what should be spent on a discipline because those involved are caught up in spending what they are used to getting.</p>
<h2>How much should students contribute?</h2>
<p>Having set the amount per discipline, the current arrangements then split it between government and student. There are three student rates. The government amount is the gap between the student payment and the intended total for the discipline. This produces 11 combinations of government and student funding.</p>
<p>The student rates reflect what governments over time have thought they could get away with. The formal rationale is a mix of the assumed cost of the course combined with the potential earnings for graduates.</p>
<p>Something that is questioned regularly is the fact that in some disciplines, such as business and law, students pay a high percentage of the course revenue (84%), and in others, such as medicine and nursing, they pay a far lower percentage (32%). </p>
<p>The argument that each student should pay a set percentage of the total cost is a narrow one – it targets the individual for their choices, and assumes the notional revenue for a discipline is really spent in that precise way.</p>
<p>Should a student pay more because the course they take costs more to deliver? The instinct is to say yes – we are used to paying more for items that cost more to produce. However, education underpins what we each can do with our future. It is not a purely individual outcome. </p>
<p>We each need someone to be an engineer, a nurse, a dentist, a scientist or a social worker. From the government’s whole-of-society perspective the system should support each individual to pursue their own potential with the expectation that it will pay off through an effective working economy.</p>
<p>Earnings by degree are also highly variable. The Grattan Institute’s higher education researcher Andrew Norton has done a lot to identify earnings by different degrees based on census data where graduates report their field of study. <a href="http://grattan.edu.au/wp-content/uploads/2014/04/162_graduate_winners_report.pdf">His data shows</a> both that graduates with some degrees, such as law, tend to earn more than others, such as agriculture, while for some graduates’ earnings are spread widely, such as information technology. In all fields there is considerable breadth, with large overlaps for all except male medicine graduates.</p>
<p>Australia is rare in having highly discipline-specific student fee bands. In many systems with student charges the fee is common across the institution or the system. The English use a maximum of £9000 (A$17,300) across the board, with most universities charging the same across each degree. Many US universities do the same.</p>
<p>The argument for a common charge is that the student earns a degree, with the government ensuring sufficient funds for that degree. If I get my arts degree should I fuss that the scientist has more government money invested in her, if we both receive the needed level of teaching, facilities and support?</p>
<p>If all students paid the top-level charge that business students pay then this would raise around $1.2 billion, <a href="http://www.iru.edu.au/media/44647/demand%20driven%20funding%20iru%20submission%20final%20dec%2013.pdf">according to estimates by the IRU in April 2014</a>. If business students can pay such amounts why can’t everyone else?</p>
<h2>What happens if fees are deregulated?</h2>
<p>Discussion about fee deregulation has been hampered by assumptions relevant to the current system. If the student could be paying any amount it throws open the question of how much could or should be spent on a particular course.</p>
<p>In a world of deregulated fees the government is giving an initial subsidy against an unknown total resource – because the university could charge the student any amount it chooses. </p>
<p>Once fee constraints are removed it is harder to say there is some benchmark resource for a discipline when the point of the system is to allow variation and difference. </p>
<p>The government argued in 2014 that students <a href="https://theconversation.com/fact-check-what-do-students-contribute-to-their-own-degrees-27280">should pay about 50% of the cost</a> of their degree, up from around 42% now. That may be plausible to some. </p>
<p>Its weakness was that in a deregulated system the student charge could be at any level so there was no basis for the 50% estimate other than universities clawing back exactly the proposed reduction in government funding, no more and no less.</p>
<p>In a deregulated world there is no reason that engineering need be resourced significantly higher than business – for two reasons. </p>
<p>First, a university could decide that it wants to maintain engineering at the sufficient level now possible but greatly ramp up the intensity of teaching for business, through more staff and more resources.</p>
<p>Second, a university could decide to significantly increase the staffing available in all disciplines, reducing student-staff ratios back to past levels. This would reduce the differences across disciplines driven by non-staffing costs.</p>
<p>Hence the higher charges go the less difference is rational in the government subsidy and student fee by discipline – but also the less need for government subsidy at all. This is the rationale behind mechanisms that reduce government funding as fees rise.</p><img src="https://counter.theconversation.com/content/40009/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Conor King is Executive Director for the Innovative Research Universities, which advocates for its six member universities. </span></em></p>Currently law students pay about 80% of their degree cost, and nursing students only about 30%. Is it fairer if everyone pays the same?Conor King, Executive Director, IRU, La Trobe UniversityLicensed as Creative Commons – attribution, no derivatives.