The Cost of Higher Education Essay

The cost of higher education within Australia is a contentious issue for all concerned. Proposed changes by the current government are looking at bringing tertiary education closer to a ‘user-pays’ situation. This is designed to make the system of higher education more viable and sustainable. It is an idea that has a solid base and is attractive to many people. However, by shifting the cost of education away from the taxpayer and onto the student, governments could be cutting off their prospective nose to spite their face. Education is seen to be many things by many people. Ways to a better career, a course to a better income and an avenue to increased social mobility are just a few of the reasons that an improved education is sought. Yet, all these solutions and more are being placed beyond the reach of normal, everyday Australians by the cost. In its efforts to create a healthier higher education system, the government is increasing its outlay. This could have the effect of placing it beyond the reach of the potential higher earnings taxpayers of tomorrow. This essay will consider the arguments for why higher education in Australia should be free of student costs and charges. These arguments will be considered in terms of the ramifications of these costs to students and their studies, the government and society in general.

As previously stated, higher education is sought for different reasons. Each potential student has their own reasons for its pursuit and there is no doubt that education at a higher level is expensive. There is not just the cost of the tuition to consider. Living expenses whilst at study, hidden costs like student unions and parking and the actual study materials like text books also contribute to the expense. The thought of attending a university is tantamount to an impending battle to a new student. The harder curriculum and discipline required is forbidding to say the least. Therefore, with these pressures upon them, it is not fair to add the financial burden as well.

The government argues that it does not expect an Australian student to bear the entire cost. At the moment, the federal government covers approximately sixty (60) percent of the cost of a university degree (Long, 2002). It also contends that schemes such as the Higher Education Contributions Scheme (HECS) and the Youth Allowance or Austudy are designed to encourage potential students to enter the higher education arena. While this may be true, it is a fact that the Government has tightened the Youth Allowance and Austudy eligibility requirements (Birrell, Dobson, (1), no date) which has made it harder for students to support themselves while at university. Private scholarships awarded to students to assist with their fees are now counted as income by Centerlink. Therefore, the amount of a a students Youth Allowance is affected. These changes have a number of implications on the equity of higher education.

If a student is ineligible for either the Youth Allowance or Austudy, their avenues to university become limited. They could become reliant on their parents for an even longer period of time. After having been supported by their parents for many years already, students may be reluctant to access their family’s assistance as a means of financial support through university. They could also be forced to seek part-time employment to subsidise their costs. Not only could this take jobs away from the unemployed, but it also places the student under increased pressure. If a student is working as well as studying, the inevitable conclusion is that there is less time for study. This could result in a poorer academic record than those students who do not have to work part-time. It can also mean that a student is fatigued and not at the peak of their learning capacity. Marshall (2003) maintains that due to scholarships being counted as income, a lot of students are even giving up this avenue of help because they cannot afford to live on the reduced amount of Youth Allowance.

A higher education cost to a student does have its positives. The fact that they have to support themselves, with or without parental help, can be empowering to a student. Feelings of self-satisfaction and confidence can result. It can also teach them, in a way that no amount of schooling can, how to budget and manage money. In terms of their education, few things affect a student’s ability to manage their time like a lack of it. With time to be devoted to work and study, students often become better organised and this skill and the other positives can be carried through for the rest of their lives. However, many of these plusses can become swept away due to pressure felt by the student to keep up the juggling that is caused by the need to meet the higher education costs.

It has been argued by Chapman (1992) that when deciding to go to university, factors like parental education and academic results feature more strongly than the economic factors. In direct contrast to this statement are the figures released after the Youth Allowance changes in 1998. After the changes, some thirty-five percent (35%) of students who were previously receiving Youth Allowance dropped out of higher education after becoming ineligible. This shows that the cost of higher education for these students placed it out of reach and so impacts on its equity.

HECS is a system that was designed to make higher education more feasible for economically disadvantaged students. It works on the principle that students defer their tuition fees and pay them back once they reach a predetermined salary. The unfortunate side-effect of this scheme is that students are often daunted by the thought of this debt and so don’t see university as a practical path. HECS is also promoted as an interest free loan to students. On the other hand, a twenty-five percent (25%) discount is offered to students for payment up-front. Effectively, this means that students who defer are being charged a flat rate of twenty-five percent (25%) interest on their tuition fees. Current rates of HECS accumulations incur approximately 1.7 billion dollars in HECS liabilities for the Government (Norton, 2002). Although this money is paid back through the tax system, the government is proposing reforms to the HECS system in order to increase the amount of HECS a student pays. On their website, the Department of Education, Science and Training (2003) states that the new reforms will, amongst other things, encourage equity within Australian universities. This could prove not to be the case. With students already deterred by the current HECS debt, an increased debt of a proposed thirty percent (30%) could further erode student confidence and university equity (Martin, 2003).

Norton (2002) states that the government currently engenders a net profit through the application of higher education costs. It does this through the repayments of the HECS debt through the tax system and by the increased revenue supplied by graduates higher tax amounts. It then uses part of this profit as revenue to continue to subsidise higher education for the students which is an encouragement for future students. Unfortunately, if they push ahead with the plan to increase the HECS debt, it could result in less students being able to attend university. Bruce Chapman, the creator of the HECS system, believes that the changes to the system will also cause a number of full-time students to drop out due to the rising costs (Martin, 2003). This could cause a vicious circle where the government can’t fill the university places due to the cost of a degree. It would then be less likely to make the net profit that is required to continue to subsidise higher education and so could continue to increase the cost. These effects on students and the equity of universities are just some of the ramifications that the costs of higher education have on students and their studies.

There is certainly no doubt that government subsidisation of higher education has advantages for many areas. Students gain a better career, which usually equates to a better salary. Other benefits are a potentially better social position (Sturman, 1997) and the ability to pass their experiences of university on to their children. Because of these benefits, it is argued that taxpayers shouldn’t be responsible for a student’s education. However, graduates enjoy a higher rate of employment than non-graduates (Birrell, Rapson, no date). Appendix A shows the labour force participation and unemployment rates of both sexes and is divided into two (2) age groups. The table shows people who have only basic skills are more than twice as likely to be unemployed than a graduate with a Bachelor degree. This confirms higher education as a benefit to a student. It also confirms that subsidisation is beneficial to the community. Because of the high rate of employment of graduates, they are able to start paying their HECS debt as soon as they become employed – provided their income is over the income threshold. Also, as previously stated, students who do defer and depend on the taxpayer to fund their education actually pay a penalty of twenty-five percent (25%) on top of their tuition costs for this convenience.

A follow through effect of this higher rate of employment are the benefits that it has to the government. With graduates of higher education more likely to be employed, this helps to keep the unemployment figures down. Another benefit of the subsidisation of higher education is the returns that the government makes upon its investment. The Australian Bureau of Statistics (2002) records that in the year 2000, 695 500 people were studying in an either full-time, part-time or external capacity. It is conservatively estimated that a graduate will earn over $622 000 in their lifetime. On an income that size, the tax rate is approximately fifty (50) cents in the dollar which equates to tax revenue for the government of approximately $311000 per student. Multiply this by the number of students in the year 2000 alone and the figure that the government is earning for its investment is over $219 billion dollars. This benefit far outweighs any deficiency perceived in government subsidies for higher education.

The minimising of higher education costs to students can also have benefits to society as well. As well as helping to keep unemployment rates down, it can also flow on to the type of people that society is producing. Norton (2002) acknowledges that higher education can have a stabilising effect on society. It improves the knowledge base and as previously mentioned, spans across the generations. A study conducted by Monash University shows that the highest percentage of undergraduates (35.1%) had fathers in the professional field (see Appendix B). This confirms the beneficial effect that government subsidisation of higher education can have on society. As well as producing stability, undergraduates are the potential leaders of tomorrow. By keeping the costs of higher education as low as possible, the government is creating the people with the skills to take over the running of the establishment.

In conclusion, the concerns regarding the cost of higher education to students are complex. The issue are relevant to students, the government and society. Government schemes such as HECS and Youth Allowance are designed to encourage students to attend tertiary studies but changes to both systems are making it increasingly harder for students. The extra costs places on students can have benefits. The non-material results of the financial pressure can produce a person who has more to offer to society and the workplace due to the challenges they have met. Unfortunately, these benefits are often not considered when students are faced with the financial pressure that higher costs can bring. The HECS reforms are also making students reluctant to enter higher education especially with the increase of debt after university. However, in spite of this, the government subsidisation of higher education does have its positives. The material benefits to a student such as a better job and higher salary can be added to the non-material benefits. This can results in a person much better equipped to handle employment and life in general than one who has not had those pressures to cope with. The benefits to the government in terms of increased tax revenue also outweigh the expense cause by higher education subsidisation. Finally, the benefits to society in terms of an increased quality of education and lower unemployment rates also offset the cost to taxpayers. Governments and taxpayers need to see that an investment in higher education is an investment in the future.