Our guide to unpacking the reforms on university fees, including what it is and who it will affect
Debate in Parliament has begun on the government’s plan to deregulate higher education fees. The legislation, which has sparked controversy since it was announced in May, was recently passed in the Lower House.
Ian Young, the Vice-Chancellor of the Australian National University (ANU), said the reform would transform ‘’average’’ universities into ‘’brilliant’’ ones. On the other hand, critics such as Greens Minister Lee Rhiannon have called it an “elitist education system”.
The Senate has referred the Bill to an expert committee on higher education for inquiry, who has already submitted their report to Parliament.
What it is: the proposal
Professor Tim Pitman, a Senior Research Fellow with the National Centre for Student Equity and expert in higher education policy said there are three important factors to the legislation – the deregulation of tuition fees, the reduction of government subsidies for degrees and an increase in the interest paid on student HELP [formally HECs] loans.
“The first one is fee deregulation, so universities are no longer capped – up until now the government has said ‘this the maximum you can charge [the student]’. They are going to let the university charge whatever they want and that is along the government’s ideology of Free Market competition.”
“The second major change is they are going to be reducing the government contribution. [At the moment] roughly 60 per cent of the cost is covered by the Commonwealth government, and the student covers about 40 per cent. They are moving that closer to a 55 – 45 split to the student, so the student will cover more of the cost,” Professor Pitman said.
The final major change is an increase to the interest paid on student loans.
“Currently the debt of the student goes up by the CPI [the consumer price index], so a really small amount – about 2 per cent. The government is going to move it to a higher interest rate,” he said.
The 2014-15 Federal Budget outlines other changes to the higher education sector, including a ‘Commonwealth Scholarship’ scheme and a commitment to $11 billion over four years for research in Australian universities.
Who supports deregulation
David Gonski, the Vice-Chancellor of the University of NSW (UNSW), told News Corp deregulation would “improve the student experience”.
“I think that the government are correct in this and I think that there is a real chance that the deregulation of fees — rather than making universities richer and so on — that they could produce further monies from doing that to be ploughed back to make them even greater,” Gonski said.
However, Mr Gonski expressed concern over the increase of interest paid on student loans.
“If the interest cost is at the CPI, then I think that is fair. And that is the way it is at the moment. If it is increased to the commercial rate, that could be very difficult for a student. It is then a proper loan.”
In a press release, Education minister Christopher Pyne said: “This Bill will spread opportunity to more students, including disadvantaged and rural and regional students, equip Australian universities to face the challenges of the 21st century and ensure Australia is not left behind in intensifying global competition and new technologies.”
Mr Pyne told the ABC that tuition fees could decrease under deregulation as competition between universities increased.
“If universities think they can get away with charging exorbitant fees, I think you’ll find that they’ll face very intense competition,” he said.
“For example in Melbourne, if Melbourne University thinks they can charge ‘x amount’ for a university degree, Monash, Latrobe, [or] Deakin will compete with them on price, forcing prices down.”
Professor Pitman said this was “unlikely”.
“Theoretically it could be a smaller cost if the universities decide to drop their fees, but across the board the vast majority of students will see an increase to the cost of their degree.”
Who opposes deregulation
Labor and The Greens said they would continue to oppose the legislation. In a letter to Education minister Christopher Pyne, Clive Palmer from the Palmer United Party said: “Deregulating universities just means they will cost more for all Australians to have a decent education to provide for their families.
“Australian universities should be for Australians. Australia has a great education system and it shouldn’t be destroyed by the Abbott government.”
Professor Leo Goedegebuure, Director of the LH Martin Institute and an integral academic in the field of higher education policy management and research, believes fee deregulation is not the only answer for universities.
In an opinion piece for news website The Convesation, Goedegebuure points to the fact that student debt in the US amasses credit card debt at a figure of over $1 trillion US dollars.
‘’Problematic as that is,” he explains in the article, “far more important is the fact that parents and students now, for the first time, are questioning the value of traditional universities and have started doubting whether they are getting value for their money.”
Thousands of university students across Australia have demonstrated against the higher education reform. Protesters in Sydney have congregated largely at both UTS and the University of Sydney.