Fees are Good for the Universities

Are fees good for universities and students?

Around the world, governments are increasingly charging for university education.  Australia is no exception.

The concerns expressed, often by academics, university administrators and students, have been that fees would limit access to university, particularly for low income people, and that the need to meet funding quotas and please their paying "clients" would lead to a reduction in the quality of education.

The National Report on Higher Education (2001) released recently (after being held back for over a year by nervous bureaucrats) should ease these concerns.

Since the Higher Education Scheme or HECS was introduced in 1989, HECS repayments have increased eight-fold to $900 million in 1999.  Largely as a result of HECS, the proportion of universities funding from private sources to increased to 32 per cent.

The HECS income has not been used to replace public monies (which grew in real terms but decreased slightly on a per student basis), but to fund the large increase in student numbers.  During the 1990s, higher education enrolments grew by more than 30 per cent to 520,000.

Importantly, the enrolments of students from socio-economically disadvantages backgrounds also grew steadily over the 1990s and matched the growth in overall student numbers.  In short, the introduction of fees did not limit access to higher education.

The Report also found that the fees and other associated reforms designed to free-up universities have lead to a greater emphasis on quality assurance and performance monitoring.  It found that growth in fee-based courses and increased enrolments in private institutions produced increased pressures to meet students' needs.

These finding are supported by satisfaction with tertiary courses.  Since the mid 1990s, the overall satisfaction rating has increased from 86.6 per cent of students to 89.7 per cent of students.

The Report results are consistent with research and evidence from both Australia and abroad.

A 2002 study undertaken by academics at the Australian National University also found that "HECS reforms were associated with increases in participation irrespective of family wealth".

New Zealand, which in the 1990s increased university fees from zero to $NZ3,500, experienced a doubling of tertiary enrolments.  During this period, Maori enrolments also increased as a share of total tertiary enrolments.

The bulk of overseas research suggests that the participation rate in higher education is not fee sensitive.  The reason, I suggest, is that the financial returns to higher education even net of fees is still very high.  Moreover, many countries like Australia have structured the fees in such a way as to minimise the impact on cash-poor students.  Under HECS, for example, students do not need to begin repaying fees until they get a job which earns in excess of average full time earnings.  And even then the repayment is spread over a number of years.  If they (or their parents) are able, and wish to repay the charge in advance they can, with a discount.

The message from the Report -- and related research -- is that HECS and associated reforms have been a boon to students:  resulting in more places, greater choice and better accountability.

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