Peter Noonan and Sarah Pilcher outline their research into a fairer, simpler tertiary education financing system.
A post-school qualification is fast becoming a baseline requirement for meaningful social and economic participation. But with the way Australia’s tertiary education funding systems are designed, only undergraduate students at public universities are guaranteed government support. Across the country, young people who choose vocational education and training (VET) qualifications are not so well served.
When fees for Certificate III and IV qualifications were relatively low, this did not result in a major inequity, but times have changed. Fees for these tertiary qualifications are increasing significantly. In several states, qualifications can exceed A$4000, depending on the level of subsidy they attract.
Full fee certificate qualifications can range from A$10,000 to A$20,000. Without access to an income-contingent loan, these fee levels present a major barrier for many students and their families.
Tertiary education matters to the majority of Australians. Many agree that both higher education and VET should together constitute the national tertiary education sector. Yet, despite decades of reform, that goal remains unfulfilled.
Instead, Australia has been left with a complex bundle of tertiary education funding policies that fails to deliver, simply and consistently, what the nation needs.
A simple and fair alternative
In the current tertiary funding system, opportunities differ greatly, depending on where students live and the type of institution they attend. And public support for students seems to be guided more by circumstance than principled design.
We conducted research into a fairer and simpler financing system that includes a student “entitlement” for all young Australians, not just those attending public universities.
The idea of an entitlement isn’t new. It exists in various guises, whether explicit or implied, in both higher education and VET. It simply means a guarantee or promise from government that a specific cohort of students will receive a certain level of support.
However, the current system is too complex and treats students unequally. This creates a risk that financing arrangements, rather than informed choice, will drive students’ enrolments and careers.
Our recent work outlines a possible way through this by proposing a new and equitable financing system, based on a youth entitlement.
Under this proposal, governments would commit to guaranteed public support for tertiary education or training for eligible people between the ages of 18-24 years. This would apply regardless of the type of qualification a student chose, from Certificate III up to full undergraduate qualifications, and postgraduate qualifications for entry to professions.
The way Australia’s tertiary education funding systems are designed, only undergraduate students at public universities are guaranteed government support.
To put an end to the ambiguity and cost shifting between state/territory governments and the Commonwealth, clear responsibilities would be allocated to different levels of government.
The Commonwealth would fund all sub-degree and degree level qualifications, regardless of the sector in which they are delivered. States and territories would fund all Certificates, including apprenticeships and other forms of entry level training.
Underpinning this, the Commonwealth would be responsible for providing all eligible students with an income-contingent loan on a consistent basis, and income support on a needs basis.
This doesn’t mean that older learners would miss out, just that funding for young people would be through the entitlement model. Governments can then fund other groups, such as existing workers, the long-term unemployed, or those facing industry transition in other ways through targeted programs.
This proposal is just the beginning. There’s more work to do in determining the details of eligibility, getting subsidy and student contribution levels right, and creating a fair and sustainable system for income-contingent loans.
There are also broader issues of system design and quality that need to be addressed for this to work. We need to ensure that students have the information they need to make an informed choice about their options, and that rules are in place to ensure our public investment results in high quality education or training.