New students face an uncertain fees future

All Australian students are required to pay tuition fees when they enrol as undergraduates in public or private tertiary institutions, although the federal government currently subsidises the fees for the majority enrolled in public universities.

Students who are Australian citizens or holding permanent residency visas can defer the remainder of the fee not subsidised by the government, known as the student contribution, through a government loan. They need only repay the loan when they graduate and are earning more than a set amount which next year will be A$53,400 (US$47,000).

The loan is repaid via tax income deductions that vary according to the graduate’s salary and increase the more the graduate earns. The interest rate is currently set at levels that rise with cost-of-living increases so students do not end up owing considerably more than when they graduated.

Private universities and other tertiary institutions offering degree courses mostly charge higher fees than public universities but government loans are not available to their students – at least not yet.

Change afoot

That is because the current long-standing situation for Australian students has been seriously complicated by the conservative government of Prime Minister Tony Abbott.

In what the government calls a series of major reforms, the current capped fee system where tuition charges were set by the government and universities had no choice, looks likely to be abolished.

In addition, government subsidies, currently only for students at public universities, would be extended to students at private tertiary institutions. That means private colleges could lower their fees and become increasingly competitive with the public sector.

If adopted, the government plans would allow public universities to set their own fees from 2016 according to how much they believed students would be prepared to pay. And, presumably, the extent of competition from private institutions.

The top eight research-intensive universities that have the most prestige and best reputations would almost certainly set the highest charges – which could be up to 50% more than they are at present.

The University of Western Australia has already announced that from 2016, a three-year undergraduate degree will cost its students A$48,000, or A$16,000 a year – markedly higher than students face at present and an indication of how eager the Group of Eight, or Go8, universities are to generate more income.

Lesser-known and regional institutions would have to settle for lower fees, possibly competing among themselves for students by keeping these to the minimum commensurate with their smaller budgets.

At the same time, many students would not only face much higher fees that would require bigger loans but, under the government’s plan, they would also have to pay higher interest rates that could be as high as 6% a year. This would likely extend the time it takes them to repay their debt and affect their finances for years.

Opposition to ‘reforms’

The government, however, does not have a majority in the Senate where Opposition and cross-bench senators are opposed to the deregulation proposal and other aspects of the government’s higher education ‘reforms’ as set out in a bill that passed the House of Representatives last month.

The Senate last month established a committee to inquire into the possible impacts on students of an unregulated fee scheme and this is unlikely to be resolved before the end of the year.

Among the submissions received, one vice-chancellor warned that giving taxpayer funding to private colleges would have “disastrous consequences” for higher education and could drive some universities into bankruptcy.

Meantime, students enrolling for the 2014 academic year will do so under current conditions: they face annual fees for their courses ranging from A$10,000 to A$15,000 for most undergraduate degrees, other than medicine, dentistry and veterinary science courses which are more expensive.

International students must first obtain a study visa at the university that admits them and must then pay the full tuition cost directly to the university, whether public or private, before enrolling – unless they hold scholarships that meet the tuition costs.

Almost all universities charge much higher fees for foreign students – often double what local students pay and without any government subsidies. For an undergraduate degree course, the annual fees can range from A$15,000 to A$33,000, plus the cost of course materials and access to institutional facilities.

In this way, overseas students contribute significantly to university running costs and to the Australian economy where their expenditure on fees, rents, clothing and food is estimated to exceed A$14 billion a year.