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ACU research shows university students are paying too much for their education


The Federal Government has recently announced a review of higher education funding. This includes a review of the funding clusters and the contributions to be made by students and the government towards higher education in Australia.  Research by Australian Catholic University (ACU) economics lecturers, Doctor Anthony Stokes and Doctor Sarah Wright shows that Australia’s current higher education funding models are not encouraging students to pursue higher education.

Dr Stokes and Dr Wright’s article in the ‘Journal of Australian Political Economy’ titled Are university students paying too much for their education? examines the costs of higher education relative to the benefits students and society receive to determine what should be the real level of student contributions to their education.

Dr Stokes and Dr Wright found that in many cases students’ payments are much greater than the real cost of their courses or the benefits that the students are likely to receive. They argue that not only is society receiving a relatively high rate of return on individuals investing in a university degree, but the Government is also profiting in some areas of higher education, such as commerce. The benefits that accrue to the Government and, society as a whole, are that university graduates make higher tax payments but also provide higher levels of research, increased productivity levels and higher economic growth rates. In addition university graduates have higher employment rates, lower crime rates, are healthier and rely less on welfare payments. The findings of their study suggest that the contribution made by students should be set at a lower percentage of course costs than currently exist.

Dr Stokes and Dr Wright claim that there are a number of serious concerns relating to the equity and efficiency of Australia’s higher education system with one of those areas of concern being the participation of students from low socio-economic backgrounds. The participation rate of students from low socioeconomic backgrounds has remained around 15 percent throughout the past decade despite representing 25 percent of Australia’s population. This is a concern for the Australian Government who are targeting 55,000 places in 2020.

When commenting on their research, Dr Stokes and Dr Wright state ‘the Bradley Review commissioned the Australian Government to work on options for achieving a more rational and consistent sharing of costs between students and across discipline clusters and our research suggests that there needs to be an alternative funding model to the current HECS model’. Dr Stokes and Dr Wright argue that the alternative funding model should make the students’ financial contributions to their studies reflect both the cost of the course and the future income that they will receive. They found that the current funding models do not achieve this. In addition the model should more fully consider the benefits that both the individual and society gain from higher education.

Stokes, A. and S. Wright (2010) ‘Are University Students Paying too much for their Education in Australia?’ Journal of Australian Political Economy, 65 (2). Available at http://www.jape.org/component/option,com_remository/Itemid,26/func,fileinfo/id,143/