University funding review recommends students could pay extra fee to help provide more places

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University students should pay an extra fee on top of government loans to fund more enrolments, a review has recommended.

The review, led by former Liberal education minister David Kemp, has found the current higher education funding model is working well and should be expanded.

It also found the system to be more expensive for the Government but that this could be offset by charging a loan fee on certain debts.

The Gillard government moved from a capped to a so-called demand-driven funding system for universities in 2012.

The changes allow institutions to choose how many students they enrol. More than 100,000 extra people are studying than in 2009.

Dr Kemp and former Liberal adviser Andrew Norton reviewed the demand-driven model at the request of the Coalition Government, which was concerned the system sacrificed quality for quantity.

But the review found no evidence of that, and Mr Norton says the funding system should be expanded to include diploma and bridging courses in order to better prepare students with low admission scores for university.

"The main problem is that they have fairly high drop-out rates, and therefore there is a fairly substantial risk to the student if they start in a bachelor degree, they won't finish it," he said.

But the demand-driven system has increased the pressure on the higher education budget at a time when the Coalition is looking for savings. Expanding it would cost up to an extra $250 million a year.

So, although the review has been largely welcomed across the sector, many groups are worried about funding over the longer term.

A handful of the nation's most prestigious universities have been pushing for higher student fees.

And none of the options flagged in the review has impressed Labor's spokesman, Kim Carr.

"What this report says, and I quote, is 'if savings are to be made in this area, the most efficient and equitable way is to reduce Commonwealth Grant Scheme Payments per students with a corresponding increase in the student contribution amount supported by the HELP loan scheme'. In other words, they want students to pay more," he said.

'Students already struggling financially'

The review's release comes just days after the release of another report by Mr Norton, which looked at the rising cost of students loans.

Senator Carr says it is part of a campaign: "This is a stalking horse for the Government's real policy agenda, which is to shift the financial burden for education on to students and to reduce the amount of money available per student through the public sector."

National Union of Students president Deanna Taylor says students already graduate from university with almost a decade's worth of debt.

"That, combined with the fact that the Government has plans to force students into greater debt by turning student start-up scholarships into loans ... means students could end up with $15,000 more debt," Ms Taylor said.

"That would be a horrific outcome for students who are already struggling financially."

National Tertiary Education Union president Jeannie Rea says the Government must be prepared to pay for an improved higher education system

"Australian students are already paying high fees when compared to many other countries to which we usually compare ourselves," Ms Rea said.

"What we are seeing is a retreat by government from paying for higher education.

"[The review authors] have copped out somewhat on how we're going to pay for it by just saying, 'well, if the Government is looking at not wanting to put more money into higher education, then clearly the students will have to pay'.

"I just don't think that's good enough."

Two Labor targets not necessary: review

The review also recommends ditching two Labor government targets: to have 40 per cent of young Australians with degrees by 2025, and to ensure 20 per cent of university students come from low socio-economic backgrounds by 2020.

Mr Norton says the targets are not necessary.

"There was no science to this target and we didn't want to encourage universities to enrol low (socio-economic background) students just to meet their target when some other course might have been better for them," he said.

Education Minister Christopher Pyne says he is considering the review's recommendations.

Ms Taylor says the targets are important because they have led to a more diverse higher education system.

"They play a really important role in establishing minimum standards that the Government should work towards achieving," she said.

"We really can't lose sight of the importance of equity in the education system and those targets play a role in that."

Topics: university-and-further-education, education, government-and-politics, australia

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