Fee change proposals ‘rarely consider real-world impacts’

Australian analysis finds that the architects of new policies should think more about unintended consequences such as the level of student debt

October 7, 2022
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Decisions about the level of tuition fees and subsidies needed in higher education should be guided more by their practical impacts and less by their conceptual justifications, according to an Australian study.

Real-world effects of fee changes – such as the economic impact on universities, blowouts in student loan repayment periods and mounting debt write-offs – are rarely considered, concluded the analysis by Andrew Norton, professor in the practice of higher education at the Australian National University.

At the same time, approaches based on rationales such as public benefit, private gain and course delivery costs that are often used to determine fee levels rarely work in practice, the study found.

After analysing various government documents, Professor Norton found no evidence that any of the architects of a dozen or so reforms proposed over the past 25 years in Australia had considered the implications for debt default or loan repayment durations.

And none had considered how the financial consequences for universities, particularly the risk of enrolling too many students, would influence how many places they offered in certain fields. Rather, reforms had increasingly relied on the assumption that enrolments in targeted fields could be boosted by reducing the fees – despite a consistent lack of evidence for this premise.

The analysis also found little evidence to support the assumption that if overall funding for teaching was increased, course quality would automatically improve. And it found that the frequently cited aim of embedding a “public-private balance” in fee structures had proven “unworkable as a policy”.

This was because any pricing arrangement that attempted to share the public and private benefits of higher education would also have to share the costs. And no government could countenance charging higher fees for nursing – a discipline with relatively high teaching costs and low graduate salaries – than for law.

Such perverse consequences could be alleviated by basing fees and subsidies on relative private benefits, so that students in high-earning disciplines paid more. But even this approach “is open to reasonable criticism, particularly around the high variability of benefits that any individual is going to get”, the study said.

“We’ve really got to think, what are the practical consequences?” Professor Norton explained. “Do we like them? If not, it’s a bad system.”

His report, published by the Melbourne Centre for the Study of Higher Education, includes forensic analyses of every proposed change to fees and subsidies since Australia introduced income-contingent student loans in 1989. As well as appraising the policy arguments, many of them now familiar in higher education circles, the paper also covers political considerations, which tend to be more opaque.

Professor Norton’s analysis draws from four Cabinet papers, four ministerial statements, six policy discussion papers, six government-commissioned reports and a plethora of academic papers, blogs and statistical sources.

He believed that while conceptual rationales should not be relied on for determining fees, they have a role in selling fee changes. “Whatever system you come up with, you have to explain it to the public,” he said. “The background policy considerations may not be the things which are most salient in the voters’ minds.”

Professor Norton said his conclusions had relevance for the UK sector, which should reconsider its opposition to an Australian-style system of differential fees. “They’ve got crazy levels of bad debt. Reallocating some of it to people with better repayment prospects would improve the overall finances,” Professor Norton said.

“Too many people are being given debts they’ve got no prospect of repaying during their careers. That’s not a sensible policy.”


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