Why UK should not Copy Australian Funding System?

 

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The Higher Education Policy Institute (HEPI) presented a new report recommending that policymakers in UK should pay more attention towards the advanced university funding system of Australia. Ironically, the Australian university funding system shares a number of features of the UK system, but at much lower expense from taxpayer.

The higher education finance policymakers are tempted to consider Australia for inspiration and the reasons are obvious. According to recent findings, the resource accounting and budgeting (RAB) charge or the amount of outstanding student loan debt being covered by the taxpayer is likely to go beyond 45%. 

The Fiscal Studies Institute has put the figure at 43.3%. It suggests that for every £1 loaned to students, 45p remains unrecovered. In sharp contrast, the Australian standard tuition fee loans remains at 25 percent that can be said as much healthier figure by all means.

This may seem a valid reason to adopt the features of Australian tuition fee system but there might be unintended consequences.

Australian fees are lower

One of the key reasons for the Australian loan system to be so much cheaper is that tuition fees in that

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country are considerably lower than that in the UK. In Australia, the maximum annual fees stand at £5,500, whereas in the UK, annual tuition fees are £9,000.

The high debt figures in the UK enormously decrease the chances of complete repayment of graduates’ loans. The Australian government easily recover their fee money because of lower debt levels.

In Australia, the RAB charge gets further reduced by variation in the fees according to subject. Tuition fees are generally lower for subjects that in general deliver lower returns, while the subjects that produce high-earning graduates have the highest fees. 

However, the emulation of Australian fee system in UK seems as a vague idea. Charging the students fees according to their future earning rather than the actual cost of degree, could worsen the socioeconomic inequalities if students who are from poorer background and averse to the debt go for low-priced subjects that will eventually offer them lower wages. 

In the UK, authorities have been mulling over a similar system, but with fees associated with the institutions rather than the subject studied. This system would suffer from the similar kind of problems, with students from unprivileged backgrounds staying away from elite institutions with high tuition fees.

Taxpayers pay more

Moreover, while the Australian system records lower taxpayer loss in regard to unpaid tuition fees, the 

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taxpayers contribute considerably higher amount in the form of teaching money in Australia. 

If the UK authorities really want to lessen the RAB charge, it could be done by lowering the fees. If they want the RAB to be reduced to zero, they could do so by emulating the pre-1998 system when there were no fees at all.

The HEPI report also highlights on the removal of caps on the student numbers. The UK presently has a fee cap system to rule the high cost of university system, though the cap system is likely to be removed in 2015. However, Australia removed it in 2008.

The Australian experience has a number of positives. Universities in the country have successfully met the high demand for places, with number of students sharply increasing by almost 20% on average. 

Although there are many positives and few downside of the Australian experience, the UK education system is different and the government should consider everything before emulating the Australian universities fees system.

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