This article is more than 5 years old

This article is more than 5 years old

Arts students will cross-subsidise the teaching of aspiring engineers if universities adopt a flat fee structure after deregulation, an ethicist and education analyst has warned.



Associate Professor Rufus Black, the master of Ormond College at the University of Melbourne, supports the government’s push to remove caps on university fees as long as students are provided with much more information about the courses on offer.

But Black will tell a higher education policy summit in Melbourne on Thursday that he has two substantial concerns about fairness, including the Coalition’s proposal to index student loans by the 10-year bond rate rather than inflation.

The former partner at consultancy firm McKinsey & Company said the compounding interest would have a “very regressive” impact.

“The lower income earners will pay a lot more; as will those who take time out of the workforce,” he said. “The very people you’d want for education to be advantaging and giving a leg up will be held down by this scheme.”

Black also plans to warn universities against adopting a simple flat fee structure for all their courses, as the University of Western Australia (UWA) has signalled it intends to do from 2016. The UWA said full-time undergraduate domestic students would contribute $16,000 per year if the legislation passed the Senate.

Black said imposing the same fees for all students would ensure those in lower-cost courses, such as arts, would cross-subsidise students in expensive-to-teach courses, such as science and engineering – even though the latter would gain a bigger financial benefit from their study.

Universities might also increase the existing practice of cross-subsidising research from course costs. “Students will look at the fees and ask ‘what do I get from it?’

“If the answer is ‘I’m getting my degree but also paying for a variety of things from which I don’t benefit’ then they’ll rightly object that this is a quite unfair form of funding,” Black said.

The government has repeatedly signalled its willingness to negotiate with Senate crossbenchers on the higher education bill in an attempt to secure passage through the parliament. The education minister, Christopher Pyne, pointed to the Higher Education Loan Program (Help) interest rate as an area for potential compromise.

A Coalition-dominated Senate committee last month called on the government to look at alternative indexation models, such as a proposal to switch from inflation to the bond rate only when the person reached the earning level to begin repayments.

Black favours another option: a surcharge added to each graduate’s loan, followed by indexation at the consumer price index only. He said this alternative was more predictable and would avoid different compound interest outcomes for different groups.

But the Palmer United party (PUP) is yet to show any signs of budging on its opposition to the government’s package, and the bill cannot pass without its support.

The PUP’s Senate leader, Glenn Lazarus, said a key plank of the government’s bill was a reduction in funding to universities.

“The bill is required to achieved this. Therefore, Palmer United will not negotiate,” Lazarus said in a written response to questions on Tuesday.

“Higher education should be a priority for the government, the country and the people of Australia. Palmer United is committed to ensuring higher education remains a priority and funding levels should be maintained, if not increased.”

A spokeswoman said Lazarus had consulted public and private universities and student unions and the feedback was “overwhelmingly against” the government’s changes.

The feedback included concerns about the impact on regional and rural universities, whereas “blue chip universities” such as the University of Sydney and the University of Queensland would be able to charge more because they had the history, status and central business district locations to attract students who would continue to pay.

Labor and the Greens are firmly opposed to the bill, so the government requires support from six of the eight crossbench senators.

A spokesman for Pyne said the level of student contributions in a deregulated system would be a matter for individual institutions, but universities were pledging to target additional scholarships towards disadvantaged and rural and regional students.

He said the government’s legislation would extend direct financial support to all students studying for higher education diplomas, advanced diplomas and associate degrees, and to those undertaking bachelor degrees in non-university providers such as private colleges.

“This means more choice for students, and greater competition amongst institutions,” the spokesman said.

Pyne and his opposition counterpart, Kim Carr, are scheduled to address the Higher Education Reform Summit on Wednesday.