I wrote this in April 2011 for the ANU student newspaper. Those without an interest in Australian education policy can safely ignore it. Opinions expressed are mine alone.
Last week’s National Union of Students (NUS) ‘Day of Action’ at ANU had the peculiar tagline ‘Say No to a HECS Increase’. I say strange because changes to HECS fees, whether up or down, will have little impact on the welfare of students or the nation relative to most other issues in education policy.
The evidence is clear that changes in HECS fees over time have hardly impacted how many people study or what they study. This is unsurprising because relative to the large increases in income, job interest and quality of life that most students gain from higher education, HECS is a minor consideration. If HECS fees don’t influence enrolments, that means that they are neither preventing students from staying in university forever to milk the system, nor driving them to enter jobs early rather than build up their skills for the good of society. So much for that.
Perhaps HECS fees discourage students from poor backgrounds from attending university because it looks like a lot of money to them? The evidence is in and they don’t – a poor and rich year 12 finisher are equally likely to go to university given the same ENTER score. The problem for poor kids is what happens before their year 12 exams, not after. We should be vigilant that this remains the case, by allowing them to defer most of their costs until after graduation through loans like HECS.
Perhaps it’s unfair to make those disadvantaged people who never get to go to university pay for the privileged minority who do? It would be, but due to our quite progressive tax system, low income earners don’t pay much tax anyway. The unfairness is mostly towards those who make good money without ever receiving higher education.
Maybe HECS has a negative impact on the welfare of people after they graduate and earn over $45,000 a year? It’s unlikely to, as any graduate earning over $45,000 a year and paying back some HECS is probably doing just fine financially. I’ll save my sympathy for those actually struggling to make ends meet, most of them in countries much poorer than our own. In any case, the alternative is that they (and non-graduates too!) pay for university in the form of higher taxes, which would leave them no better off overall.
Might HECS repayments discourage students from working or participating in society? If anything HECS, being a debt you can pay off, would encourage participation and work relative to raising other taxes, which you can never pay off. On average taxes cost the public at least $1.20 for each dollar the government spends. Income tax increases on high earners cost society at a minimum $1.30 for each extra dollar raised. I am confident the overhead with HECS fees is less than 30%, which is why I prefer it. Nonetheless I won’t pretend the difference is huge.
Doesn’t society have a moral obligation to pay students for doing something that benefits everyone? Actually, it should only bother if they aren’t already motivated to study out of self-interest, which clearly isn’t the case. I hope I’m doing good for society when I write for Woroni, but the editors have no obligation to pay me if I enjoy it enough to do it for free!
Don’t HECS fees commercialise universities? If only that were so. I would much rather the priority for Vice-Chancellors was to provide a quality education at a good price to drive up student enrolments, rather than curry favour with politicians and public servants. Maybe we should change the rules so that administrators have to spend most of our fees on our education, but can spend a proportion on their pet projects as a reward for attracting our business.
Aren’t HECS fees currently set arbitrarily, with law students paying most of the cost of their degree and science students only a small fraction? Yes. When politicians set education prices you can’t expect there to be much rhyme or reason, but that’s no reason for a general increase or decrease. If you want a general principle for setting fees for different areas of study I would suggest this one, which is both efficient and equitable: raise them until they discourage students from enrolling, then stop.
Ultimately though, the level of HECS fees is a second-tier issue in education policy. Ensuring administrators and academics provide quality lectures and tutorials; giving special help to kids who struggle in primary school, before they fall behind; getting degree places to match up with student and employer demand; ensuring income support allows poorer students to attend university without becoming a handout to the wealthy. These are the issues NUS rallies and Woroni opinion pieces should be about.
Tagged: economics, education, efficiency, public policy
