Uni Cuts Will Deter Low-Income Students


The Federal Government recently announced $2.8 billion worth of cuts to the higher education sector. They were immediately condemned by a rare alliance of peak student and staff organisations, as well as university administrations. The full scope of the cuts is only now beginning to be understood.

The Government has defended the cuts, the biggest since 1996, by arguing they are necessary to fund the proposed Gonski reforms to schools funding. The new Tertiary Education Minister Craig Emerson, among others, gives the justification that universities are “elite institutions” — fair targets in redistributing money towards primary and secondary education.

There is a strong chorus of opposition to this line of argument, including David Gonski himself, who argues that ripping funding out of one part of the education budget to give to another is nonsensical. There’s enough evidence to suggest that Gonski, and student and staff unions, are correct.

Firstly, let’s take a look at the proposed Gonski reforms. The Government has announced $14.5 billion of funding, over six years, to schools. This is about half of what the Gonski review recommended, so the connection between this funding announcement and the much lauded review is already tenuous. Further, the package includes $2.4 billion in new funding for private schools. That's “more than [the panel]recommended”, says former Western Australia Premier Carmen Lawrence, a member of the Gonski review panel.

Essentially, the government is ripping money out of universities ($2.8 billion) to pay for increased funding to private schools ($2.4 billion). Australia is the fourth biggest spender of public money on private schools in the world. It’s also the fifth lowest spender on universities out of the developed world. We spend less money on public education than the United States, Britain, France, Germany and New Zealand. Taking money from universities and students to give to private schools makes no sense.

Similarly, taking money from the universities that train the school teachers who will ostensibly “improve” schools make no sense.

It’s worth looking at the different components of the cuts. Even though all of the cuts are significant, they do have an impact on different areas.

The single biggest cut, and the one that will have the most direct impact on students, is the conversion of Start Up Scholarships to loans. Start Up Scholarships are worth $2050 per year and are paid to the 245,000 students who receive Youth Allowance. They’re used by students to cover necessary academic and accommodation costs. Converting the scholarships into loans, added onto a student’s HECS debt, will cut $1.2 billion from the higher education budget and have a huge effect on students. The average HECS debt is $16,100. Four years studying on Youth Allowance will now increase that debt to $24,300, an increase of 75 per cent.

The average HECS debt for an engineering student after studying for four years is $33,452. These cuts mean that will rise to $41,652, an increase of 25 per cent. University graduates will lose more of their income to pay back their debt because of the government’s increase to private school funding.

Not only is this terrible policy, it is completely regressive due to who receives Youth Allowance; recent reforms targeted the payment towards students from rural and regional areas and those who can’t rely on their parents to pay their way through university. Unfortunately this means that it is now those very same students, from low-income backgrounds or regional areas, who are having their debt massively increased. These groups are also the most debt-adverse, meaning that such a significant increase to their debt, if they come to university, is likely to deter some students from studying.

The Government estimates that from next year 80,000 new students will be hit by these cuts. Over the next few years hundreds of thousands of students will have their debt significantly increased because they receive government support to study.

The next biggest cut is the $900 million to be ripped out of university budgets over the next two years. This is being done though a mechanism called an “efficiency dividend”. The dividend will be 2 per cent in 2014 and 1.25 per cent in 2015. In real language it essentially means that university budgets are going to be 2 per cent smaller next year and an additional 1.25 per cent smaller than that the year after.

The University of Sydney estimates an initial reduction of $50 million. It’s likely universities will lose more than that over the next few years because the indexation of university funding will apply to the total amount after the efficiency dividend — meaning that universities have taken a real, permanent cut to their funding.

What this means for students and staff is pretty clear. Over the past few years, most universities have embarked on a program of course “rationalisation” and staff “efficiency”. Generally this means that “unprofitable” courses have been cut, schools and departments have been merged, class sizes have increased, and staff who focus on teaching and learning at the expense of research have been sacked. Budgetary factors have been the main justification for these changes, and with another $50 million hit, plus a permanent reduction in ongoing funding, it’s likely to get worse.

The other cuts include abolishing the 10 per cent discount if students pay their university fees upfront, saving the government $230 million, and capping tax concessions for education related expenses at $2,000 per year, saving $500 million. It's true that students from wealthy backgrounds were, for the most part, the beneficiaries of the 10 per cent discount on upfront fees, but unless savings from its abolition are redistributed to reduce fees for less wealthy student it’s difficult to understand why that cut should be supported.

The capping of tax concessions will increase out-of-pocket study expenses. It will likely deter those working from returning to university to study a postgraduate degree.

The government's cuts are wide-ranging in scope and will have a real, direct impact on hundreds of thousands of students and thousands of university staff around the country. There is a unique opportunity for staff, students and university administrations to oppose the cuts together and explain to the public what they actually mean. It is, after all, an election year.

Universities train our engineers, teachers, doctors, nurses, public servants and lawyers. We should be trying to shift the debate by reminding people how universities are critical institutions, and why we need to fund them more, not less. Treasury has estimated that free university education would cost a mere $2.5 billion per year. Given the amount of money the government is prepared to rip out of universities to fund private schools, it doesn’t seem like a huge amount. Making university free would end debates about trying to save money in the Federal budget by increasing student debt and would allow universities to focus calls for increased funding purely on improving teaching and the student experience.

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