This week, the word on every student’s mind is cuts. After the government announced the $2.8 billion funding cut to Australian universities, there’s been a lot of chatter about the controversial Higher Education Reform Package. Whatever your feelings towards these new regulations, they’re going to hit on January 1 2018, so we’re here today to give you the facts, and as always, to support you on your study journey.
The key motives
The motivation behind the reform is essentially to keep Australia’s Higher Education sector alive and thriving- the key concepts being sustainability, transparency and accountability.
The country has a $52 billion student loan debt on its shoulders, which is considered unsustainable and in need of serious action. An analysis by Deloitte has revealed that universities have been over-funded, where in 2010 to 2015, far more funding was handed over for course delivery than was actually required. The reform intends to recover the loan debt faster, be more selective in handing out financial contributions to students (aka Commonwealth Support), and crack down on university practices to ensure each institution is operating fairly, efficiently and effectively.
The big changes
1. Increased course fees for Commonwealth Supported students
For students in Commonwealth Supported Places (CSPs) who share the cost of their course with the government, their student contribution will rise. This is essentially an effort to better balance the shared cost between student and taxpayer. The adjustment to course fees will take place over four years, from 2018 to 2021, at an increase of 1.8% per year. The maximum total increase over the four years is 7.5%, however, it depends on what you study. On average, students are likely to see a 4% increase in total. This means over a four-year course, the increases in fees will range from $2,200 to $3,600. If you’re not in a Commonwealth Supported Place, you won’t be affected by this new change.
2. Earlier repayment for HELP study loans
Students who have taken out a HELP loan to pay their share of course fees will have to pay back that loan sooner. At present, once a person’s salary hits $55,874, they are required to make loan repayments through the tax system. As of 2018, the threshold will be lowered to $42,000. This will see many graduates entering the workforce having to repay their debt from day one. Even existing students, who are part way through a degree and earning more than $42,000 but less than $55,874 will be affected by the change.
3. An indexation change for HELP study loans
Another change to affect loan repayment is indexation. Previously a student debt was indexed to the Average Weekly Earnings (AWE). In other words, as Average Weekly Earnings rise, a student’s debt rises by the same percentage increase. Following the changes, a student’s debt will be indexed to the Consumer Price Index (CPI). This will have an impact on a student’s debt figure, but it’s a bit early to determine what that impact will be. Historically, the CPI has grown at a rate greater than average weekly earnings.
4. Performance-driven funding
A small proportion of a university’s funding (7.5%) will be determined by how well the university performs in relation to the Government’s measures, including how transparent universities are about aspects like course costs, and course entry practices, and how many of their students complete full qualifications.
The silver lining
It’s not all bad news – there are some aspects of the reform that could make study more accessible for you.
Entry requirements: Entry requirements are a barrier for many people seeking a degree, which are established by the universities themselves. The government’s reform aims to make these requirements more transparent, to ensure they are fair and inclusive to any individual with their heart set on a degree.
Students in regional areas: Those living in mainland Australia will benefit from the establishment of 8 community-owned study hubs, to which the government is committing $15 million. This initiative is to increase technology and support, as well as encourage regional students to remain in their local area.
Students of low socioeconomic status: The government is paying special attention to people of low socioeconomic status, with various initiatives to help get them into study.
Tax dollar expenditure: The higher scrutiny placed on universities will better protect the use of your tax dollar, if that’s any consolation. The government is making a number of changes to ensure universities are making the right financial decisions.
Now that you’re familiar with the ins and outs of the reform, we hope you’ve gained more clarity around your future as a student.
“In light of the proposed changes,” says Paul Wappett, CEO of Open Universities Australia, “it is now more important than ever that the sector and government come together, to ensure students who decide to pursue higher education choose the right degree, and that we support each student to successfully achieve their educational goals.”
If you’d like to read about the Higher Education Reform Package in greater detail, find it here on the Department of Education and Training website.