The federal government has released the final report on a Universities Accord. Taking more than a year to prepare, it is billed as a “blueprint” for reform for the next decade and beyond. It contains 47 recommendations across student fees, wellbeing, funding, teaching, research and university governance. You can find the rest of our accord coverage here.
The Universities Accord final report makes recommendations that could significantly change what many Australian students pay for their higher education.
Course fees have increased dramatically in recent years for many domestic university students, burdening graduates with high debts. It is not unheard of for graduates to have debts over A$100,000.
The report is damning of the former Morrison government’s Job-ready Graduates scheme, introduced in 2021. This fuelled debts when it increased fees to some courses, such as humanities, communications and human movement.
But what should replace it?
The report says student fees should be based on lifetime earnings. But it also leaves a lot unsaid about what students will actually pay or when change might come.
What will Australian students pay?
By world standards, Australians already contribute a huge amount to the cost of their education.
Data from the OECD shows there are only a few other countries where students and their families contribute more to the total cost of tertiary education.
To make the system “fairer and better reflective of the lifetime benefits that students”, the report recommends a reversal of some or all of the fee increases introduced under Job-ready Graduates.
This would mean significant reductions for many students. For example, the cost of many subjects in an arts degree rose by 113% under the scheme. Reversing the Job-ready Graduates increases could cost the federal budget a billion dollars or more, depending on the final details.
The report recommends “Commonwealth Supported” students (most undergraduates in Australia) should still pay different amounts for different areas of study. But it says fees should reflect “projected potential lifetime earnings” for graduates.
This would return to a logic that helped set fee levels before Job-ready Graduates. In the past, lawyers have earned more on average over a lifetime than nurses, so students studying law are asked to contribute more than those studying nursing.
To simplify the system, the report suggests fees would also be divided into three tiers instead of the current four.
Better ‘HELP’
Australia’s HECS-HELP and FEE-HELP schemes for undergraduate and graduate students are the envy of many other countries. They mean students contribute to the cost of their education but remove barriers for those who cannot afford the fees upfront.
This is because students only begin to pay back their loans once they earn a certain level of income, and repayments change yearly if earnings change. There is no “real” interest on the loans, but they are pegged to inflation. This was less of an issue while inflation was low, but has recently seen student debts climb by more than 7%.
So the report recommends debts are increased each year based on whatever is lower, the Consumer Price Index (CPI) or Wage Price Index (WPI): in other words, inflation or how much wages are growing. This will cost the federal budget more but would mean the growth of an individual’s debt is more closely tied to wage growth.
The Job-ready Graduates scheme for uni fees is on the chopping block – but what will replace it?
Making sure student debts are fair
The report also asks Australian banks to view HELP loans differently from other debt, such as credit card debt, when assessing whether or not to approve a bank loan. This follows concerns graduates are not able to secure home loans due to their HELP debts.
As the review panel explain, a key feature of a HELP scheme loan is the repayments change with income and only needs to be repaid above an minimum earning threshold, so it has much better terms than other loans.
The report also recommends other ways the HELP system can improve, especially for some groups of low-income earners. At the moment, repayments are based on a debtor’s entire income, rather than income above the repayment threshold.
This means repayments can increase as incomes rise above each threshold but by more than the total increase in income. As the report notes, in 2022-23, when a person’s income was $48,360 they repay nothing of their student debt, but a $1 increase in their earnings and they had to repay $483.61.
So the report recommends we move to a marginal repayment rates approach (like in some tax systems, which applies a tax rate to each extra dollar over a threshold), to minimise the chance that some HELP debtors are actually worse off for earning more.
Further help for students
The report wants to see the government subsidise new fee-free “preparation” courses (an expanded range of what has been termed enabling courses). These are designed to prepare students to succeed in their studies and would be offered to anyone who had been accepted into government supported courses, with a Commonwealth Supported Place.
The review also wants to see financial support for students who have to do work placements to complete their degrees, such as nursing, allied health and teaching. These compulsory placements can be very costly for students. For example, recent research on social work students has found the financial burden of doing these placements can be crippling, with students having to give up paid work, travel long distances and pay for clothing.
Dean Lewins/ AAP
Student income support
The report recognises one of the biggest challenges for many students, especially many underrepresented groups, is the cost of living while studying.
The current $639-a-fortnight from Youth Allowance is hardly enough for even the most meagre lifestyle. This means university can be almost impossible for many people unless they have family support or additional paid work, which can often put pressure on their studies.
The report makes specific recommendations about extending eligibility criteria for student income support payments for some part-time students as well as increasing the threshold for the parental income test for eligibility for some students.
HECS-HELP loans have become unfair for women but there is a way to fix this
A long way off?
While the final accord report proposes some major changes, much of the detail, such as fee levels, is not included.
In fact, it suggests it should be up to a new Australian Tertiary Education Commission to sort out.
The details, not least who pays, what, when and how, are critical to the success or otherwise of the accord. They will likely shape its impact (positive or negative) for a generation to come.
Ahead of the next federal election (either this year or early next), any major new policy with a high price tag like reducing students fees could be a big ask for the government.
Establishing a complex body such as a Tertiary Education Commission will also take time. And this runs the risk that political will could falter and priorities will shift, especially if there is a change of government.
Nevertheless, this much anticipated final report has good news for many universities students who are struggling with the costs of study, even if it does not offer any immediate relief.
