Topics: Higher education reforms
E&OE…
Chris Hammer
Joining us now is Senator Scott Ryan, he’s the Parliamentary Secretary for Education. Senator, good morning.
Scott Ryan
Good morning Chris.
Hammer
The Vice-Chancellor of Sydney University Dr Michael Spence says he fears that the children of middle class families might be priced out of higher education. Surely he knows what he’s talking about?
Ryan
Well I did hear the interview with Dr Spence as well this morning on the ABC and I’m not quite sure why he has that fear. If we just go through a couple of the measures that the Government’s announced, firstly we’ve retained the Higher Education Loans Program, what was once called the HECS scheme, so it doesn’t matter what course someone enrols in, they don’t have to pay a single dollar upfront, all the cost of that course is deferred until after they earn $50,000 a year. Now research over many years has shown that that deferred loan program ensures that people have access to university, no matter what their background or means.
Hammer
So, Professor Bruce Chapman says he thinks that the price of a university course at a sandstone university could triple, is he right?
Ryan
Well I think that’s a matter for the universities. As the Minister said, the prices for some may go up, the prices for some may drop, but importantly what we’re looking at here also is dramatically expanded access to post-secondary education for people that don’t want to undertake university pathways, so associate degrees, diplomas, and advanced diplomas. Now for the first time students accessing those programs are going to have access to the subsidised deferred loans scheme that means there’s no upfront price.
Hammer
You say it’s up to universities to set the prices for courses, but surely the Government is, in making these sweeping changes, has made its own calculations, there’s families around Australia trying to plan for the future, give them an idea, how much more expensive will the average university course be?
Ryan
Look Chris, that’s what deregulation’s about, it is a matter for the universities and as the Minister’s made clear, we have a couple of years to work through the real nuts and bolts of how we make this system work at the fine, granular, administrative detail. So will some courses go up? I imagine some of our more prestigious courses could increase. Will some courses drop? They may well. That’s what deregulation is about, so that students, families, and universities can make the choices that are most appropriate for them, but most importantly, all without paying a dollar upfront, every cent of the cost of doing that degree can be deferred until you earn over $50,000 a year, which is what retains the fairness in the system.
Hammer
Ok, so Dr Spence says that there’s been a 20% cut in Commonwealth funding for each student, so the universities are going to have to increase fees by at least 20% just to keep pace, aren’t they?
Ryan
Let’s put this in context, on average the taxpayer subsidises just under 60% of the cost of a university course for a student in Australia. In relation to expanding access to post-secondary education through those associate diplomas, diplomas, and associate degrees that I mentioned earlier, through those new colleges and courses that people have access to, the subsidy is being reduced to just under 50%. So there’s still a substantial taxpayer subsidy for every student going to a university in Australia, this is about expanding access.
Hammer
But universities will have to increase fees to students just to maintain current standards of education.
Ryan
What Michael Spence also referred to in his interview this morning was all the range of cross-subsidies that were going on within universities. So universities are complex administrative and bureaucratic beasts, I’ve worked in one, so they will make arrangements that reflect both supply and demand of the courses and the students they want to come and the value that students think they will get from that course. But there’s still a substantial taxpayer subsidy for all people enrolling in post-secondary education in Australia.
Hammer
But it’s not as much as it was.
Ryan
Well actually we’re increasing funding to the higher education sector through the expansion, because there’s going to be tens of thousands of students that now get access to the deferred loan program for those non-university courses that up until now they have not had access to HECS or HELP even, so what we’re doing is we’re actually increasing the investment in public higher education.
Hammer
Now in introducing these reforms, the Government would know what the average HECS debt is, it would know the average period of time it takes to pay back that HECS debt, so for those average students, how much more money will it cost them to go to university, how much more will it cost to pay off that debt, under the new interest rate rules for HECS loans?
Ryan
Well let’s put the interest rate in context, because we are expanding access to higher education, we’ve maintained the demand driven system and we’re expanding access to those new courses that previously didn’t have assistance. We’re all doing it effectively with borrowed money because the Government is trying to bring the budget back into balance. So all we’ve done is we’ve said rather than have the student debt indexed at the rate of inflation, it’s going to be indexed at the Government ten year bond rate, at the moment that’s about one point above inflation, so it’s not a substantial or huge increase, and if inflation rose it would be capped at 6%. Now part of the challenge here is, I don’t have the figures about average students and time to repay handy, but part of the point of a deregulated system is that we’re not have as many averages, we’re going to encourage people to choose courses that suit themselves, and cost will be one of the factors they take into account.
Hammer
But how can they take costs into account if they don’t know how much it’s going to cost? All around Australia right now there’s families going “can we afford this?” or “if we can afford it, how much is it going to cost?” and the problem for the Government is it that you can’t tell them?
Ryan
Let’s again go back to this core point of our higher education system, that we support 100% no family should have to sit around the kitchen table and say “can we afford the university fees?” because they don’t have to pay them. No student has to pay a university fee to get into a university in Australia, they can defer 100% of it. There are other costs with university I accept, particularly for regional students that have to travel or move and they are very legitimate concerns, but in terms of the university fees, no one has to sit down and say “can I afford to do that course? Because I don’t have the money on me at the moment.” That’s the most important point.
Hammer
There would be people, say with a small business, a middle class family, saying “we’d really like you to go to university, we don’t know how much it’s going to cost, let’s forget it, we’ll save money, you just come straight into the business.” Isn’t that the sort of the decisions that a normal family would be making at the moment because the Government simply cannot tell them how much it’s going to cost to go to university?
Ryan
Anyone that was enrolled in a university course before last week’s budget, they know the cost because they remain under the existing system until they finish their degree or until 2020, whatever’s earlier…
Hammer
That’s right, so it’s the future…
Ryan
We’ve got a couple of years to work through the new system, and so that people who do enrol after the Budget, the new fee arrangements will start from 2016. But we’ve got time on our side and the Minister’s made it clear that that’s one of the reasons that we have that length of time, to allow us to make sure that all the administrative nuts and bolts of this are lined up appropriately.
Hammer
Ok Senator, just a point of clarification, the Prime Minister said on radio yesterday that if you start under one system you will finish under that system, strictly speaking is that correct or did he misspeak?
Ryan
I was travelling yesterday Chris, so I’m not familiar with the particular interview. As I understand it, it’s as I stated earlier, that if you’re enrolled in a course or accepted an offer before the Budget last week, you’ll be under the existing arrangements until you finish or 2020, whatever occurs first. If you enrolled or accepted an offer since the Budget, that from 2016, you’ll be under the new arrangements.
(Ends)