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What are scholarships for?

Are scholarships to help out students in need? Or to make universities look good? AAP

The University of Sydney’s Vice-Chancellor, Michael Spence, presumably achieved his political aim by announcing that his university could offer scholarships to almost a third of its students if fees were deregulated. Education Minister Christopher Pyne enthusiastically used Spence’s announcement to laud the benefits of fee deregulation in parliamentary question time.

However, Fairfax’s BusinessDay contributing editor Michael Pascoe observed:

Odd game whereby uni pretends much higher fees are needed to offer more scholarships needed because of higher fees.

The National Tertiary Education Union found that :

… the simple arithmetic of the new Commonwealth Scholarship scheme does not add up.

On the figures the University of Sydney proposes, the third of students who would get a scholarship would “be on average $3,400 worse off than they are now”, in part because universities have to increase their fees by 30% just to compensate for the government’s proposed cut to university funding.

But presumably scholarships are meant to do more than provide political cover for the government’s proposal to cut the current government scholarships and to introduce a policy that the government and most vice-chancellors want to introduce for other reasons. So what are the purposes of scholarships?

To increase diversity?

Spence said :

I would like this university to reflect the demographics of society as a whole.

That ambitious aspiration would require the University of Sydney to more than triple its proportion of students from a low socioeconomic status background from 7.5% to 25%, an increase from 2,036 to 6,750 students.

Spence said:

We are not just concerned about the disincentive effect of higher fees on students coming to university, but also the potential debt issue for people going into public good but low-paid careers [such as nursing, teaching and social work].

But there is no evidence that higher fees have reduced enrolments in the past nor that students don’t enrol because they do not want to incur HELP loans.

The difficulty is that in Australia, the UK and the US educational inequity starts much younger, at least by primary school, where different levels of attainment shape aspirations and subsequent educational opportunities.

Particularly for highly selective universities such as the University of Sydney, it seems likely that programs to increase equity will need to start much earlier in children’s lives than the high school students to whom scholarships are usually targeted.

For a competitive advantage?

A second reason for scholarships is to increase universities’ competitive advantage. Many universities have substantial “merit” scholarships to attract high-scoring students. But even equity scholarships won’t necessarily increase the proportion of equity students overall.

Elite institutions are likely to charge the highest fees generating the highest revenue to offer the biggest scholarships to equity students. They are likely to attract equity students from the institutions that charge lower fees and have more equity students and so can offer scholarships of lower value.

For example, Federation University Vice-Chancellor David Battersby told the Senate Committee Inquiry that since almost a quarter of his university’s students are from a low socioeconomic background and his university expected to be able to increase its fees by rather less than other universities, scholarships would average about $30 per disadvantaged student at his university.

Such a competition for disadvantaged students would benefit disadvantaged students who previously may not have felt able to attend elite universities.

But it is not clear that this would allocate the most support to the most disadvantaged students. Neither is it likely to increase the proportion of equity students attending elite universities unless they substantially change their student outreach and selection policies.

For redistribution?

A third possible reason for scholarships is to redistribute resources from students who can afford to pay higher fees to students who cannot afford the cost of higher education, usually their living expenses. This has deep traditions within universities. At least as early as the 16th century, students at European universities paid different fees according to their class, with poor students (paupers) paying no bursa or fee for living expenses.

Commonwealth scholarships will take from those who can afford it, and give to those who can’t. Kind of like Robin Hood. Flickr/Andrew Becraft, CC BY

Australian universities have funded scholarships out of tuition fees since their foundation 150 years ago.

This arrangement is common in the USA and Canada. For example, what are known as tuition set-asides are mandated in Florida and Texas. Ontario colleges and universities are required to set aside 30% of their tuition revenue for financial aid.

An iconic form of fee redistribution practised by some elite US universities with very big resources is needs-blind admission, where the university admits students regardless of their capacity to pay the university’s very high fees and offers equity students the amount of financial aid they need to attend university. Spence claims that fee deregulation would allow his university to take a small step toward needs-blind admission.

However, such admission policies improve universities’ equity performance only marginally. A study of the 80 most selective private US institutions found that an increase in institutional grant aid per student of 1% was associated with an increase in the enrolment of equity students of only 0.03%. Institutions that granted financial aid in the form of grants had 0.97% more equity students than institutions that granted financial aid in the form of loans.

Equity practitioners

Australia is fortunate in having university equity practitioners who are expert in their fields, strongly committed to increasing equity in higher education and have good processes for collaborating and cooperating in equity policies, practices and programs.

One may be confident that they would develop student outreach and financial support programs to ameliorate the regressive effects of the Coalition’s policies. However, thus far they seem to have been mostly bypassed by a government and by vice-chancellors who seem more concerned with winning a political argument than improving opportunities for disadvantaged students.

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