Steven Schwartz, VC of Macquarie University, points to a great description of university fees.
Observing the situation from Ireland, the President of Dublin City University Professor Ferdinand von Prondzynski writing in his blog says that in this new world of higher education, nobody is actually “buying” a commodity, or even a service.
“Rather, we are moving towards what you might call ‘targeted taxation’, under which the cost of education is being funded much more directly by those benefiting from it, with some level of subsidy coming from the wider society. It isn’t really a fee, but rather a kind of educational equivalent of a capital gains tax, if you like an ‘intellectual gains tax’.”
That is a very nice description of university fees – but I don’t think it’s correct.
Schwartz is writing about the hysteria that is coming out of the UK after the new government passed laws to increase student fees. The Australian Higher Ed section has two articles today on the issue. What we’re seeing to a two-fold problem. First, an over-reliance on a single source of finance – the public purse – and second, the bursting of a higher education bubble. The UK government has overinvested in higher education. The new government isn’t saying that people cannot go to university, but rather that they have to pay more for the experience.
Tim Dunne explains what has happened in the UK.
We all knew the boom years would come to an end. In Britain, in the period since 1997, student enrolments increased to 43 per cent of the 18 to 30 age cohort; public spending on universities rose by 25 per cent and academic salaries became respectable in relation to other professions. As the storm clouds gathered at the end of the Labour years, then deputy prime minister Peter Mandelson told universities they had never had it so good. He was right, although good news never felt quite so good when it passed through the lips of the prince of darkness.
In place of a growing and vibrant sector, the mood music in British higher education is one of redundancies, departmental closures, pay freezes, further restructuring and possibly institutional insolvency. The October comprehensive spending review proposed a 40 per cent cut in the teaching grant; with a hike in fees (up to pound stg. 9000 or $14,000 a year) as the only way to close the funding gap. Small wonder one academic on the move cited a climate of fear as a key push factor.
Many British academics will be coming our way. But what could that climate of fear consist of? Dunne tells us.
Students in these programs will think of themselves as customers and will demand more contact with academic staff and better quality feedback for their assignments.
I’m underwhelmed. Australia will be getting a whole bunch of people who fear student contact and giving quality feedback to their students. That’s what happens when you have too much free government money in the system. Adam Smith spoke of this in his Wealth of Nations.
The discipline of colleges and universities is in general contrived, not for the benefit of the students, but for the interest, or more properly speaking, for the ease of the masters. Its object is, in all cases, to maintain the authority of the master, and whether he neglects or performs his duty, to oblige the students in all cases to behave to him as if he performed it with the greatest diligence and ability. It seems to presume perfect wisdom and virtue in the one order, and the greatest weakness and folly in the other. Where the masters, however, really perform their duty, there are no examples, I believe, that the greater part of the students ever neglect theirs. No discipline is ever requisite to force attendance upon lectures which are really worth the attending, as is well known wherever any such lectures are given.
…
Those parts of education, it is to be observed, for the teaching of which there are no public institutions, are generally the best taught. When a young man goes to a fencing or a dancing school, he does not indeed always learn to fence or to dance very well; but he seldom fails of learning to fence or to dance.
There are fears this sort of accountability and requirement for good teaching practice could come to Australia.
The question is, could such a dramatic reweighting of higher education towards private funding happen here.
The simple answer is no, at least not while the mining boom and buoyant economy continue. But the British move may signal the beginning of a broader policy trend that will be taken into consideration in the present review of base funding.
That means we’re going to wait until we go broke too before reforming the higher education gravy train.
There is also this.
But of more immediate concern, especially for those in arts departments, is the signal from Britain that there is less public good in the humanities than science, technology, engineering and maths subjects, which have escaped brutal cuts to teaching subsidies.
“If they can get away with saying there is no public good in half of the programs and it is all just private benefit then other governments are likely to try [to] save money in that way as well,” University of Melbourne higher education policy expert Simon Marginson said. “Longer term, all treasury officials and political parties now have the potential to reduce subsidies from whole swaths of higher education programs.”
While I share his concern, I think Marginson’s immediate argument is wrong. It isn’t that there is no public benefit in having an educated populace, but rather the private benefits are so high that individuals should pay more (or all) of their higher education costs. To be sure, there is an argument for scholarships and bursaries for special needs and low-income individuals and what-not but the principle of self-funded higher education should be established as the norm.
The concern I have is that government views the higher education system as some form of industry policy where they can pick winners. It is not clear that a humanities student is less valuable from a public good perspective than a science or technology graduate.
“The UK government has overinvested in higher education.”
I don’t see you infer that — this would only be true if the level of education that is optimal was reached, and it’s not clear what this is. It’s also a multi-level problem. At one level (e.g., the government) the optimal investment might be higher, but at another level (e.g., the individual), the optimal investment might be lower, or vice-versa.
I do however agree with the main idea that there is a lot of student whinging out there — HECs to me is a great thing.
conrad
15 Dec 10 at 1:15 pm
I should caveat that by the idea that the British system will end up like the Australian system with HECS (i.e., students pay more but have easier pay-back terms), as seems likely.
conrad
15 Dec 10 at 1:17 pm
see this
Sinclair Davidson
15 Dec 10 at 1:19 pm
“student enrolments increased to 43 per cent of the 18 to 30 age cohort”
What’s the optimum number? I’m happy to believe both possibilities incidentally — that we could be over it already or that we could be under it. To me this is an empirical question.
At the individual level, it’s easy to answer — as long as graduates keep getting paid more or benefit over non-graduates in other ways, then, excluding apriori differences and opportunity costs to the individual, there arn’t enough (i.e., the individual should try and get a degree). Alternatively, I can think of no simple measure like this at the government level.
conrad
15 Dec 10 at 2:42 pm
The optimal number for a publicly funded university system must be less than 43 percent. Otherwise there wouldn’t be a funding crisis.
Generally the optimal number will depend on both demand and supply factors which inturn will be a function of the institutional and financial arrangements in the system. A system that is ‘free’ at point of sale (or service provison, if you prefer) will have excess demand. So within that institutional framework there were too many. In other framewords, as you suggest, it might be too few.
Sinclair Davidson
15 Dec 10 at 2:55 pm
” It is not clear that a humanities student is less valuable from a public good perspective than a science or technology graduate.”
Putting aside quantifying the relative public good of each set of disciplines, presumably the argument is that humanities courses are cheap to produce and will be offered at prices that reflect those low costs. Therefore there will be many arts graduates whether or not there are any subsidies.
However science and technology courses have higher costs so fees that cover all those costs will have a larger effect on demand than in the humanities.
I agree that these charges are not taxes – they are fees for service, albeit with the government absorbing risks on lending to fund them.
Andrew Norton
15 Dec 10 at 3:04 pm
I was with you until I got to :
Because we all know what BA stands for in certain degrees
entropy
15 Dec 10 at 3:05 pm
Andrew – that is a relative cost argument and if that is the justification for subsidy then okay it’s plausible etc. but that’s not Marginson’s argument.
entropy – yes, I understand. LOL. But the principle of a BA is not wrong or inappropriate. It’s the rubbish peoplw choose to do within the BA structure that’s the problem.
Sinclair Davidson
15 Dec 10 at 3:16 pm
Sinc – Indeed, there is a fascinating psychology here evident in Marginson’s comments and in many other people’s remarks on this issue. The concern is not just about the money. It is about recognition and validation by the state in the form of money.
Andrew Norton
15 Dec 10 at 4:10 pm
Don’t get me wrong. I have friends who have BA qualifications.
(must excuse me, I am on hols).
entropy
15 Dec 10 at 4:19 pm
The huge elephant in the room here is the unexamined assumption that getting a degree must involve intellectual gain. Whereas I would suggest much of degree level education in Australia and the UK involves less gain than the opportunity and taxpayer cost involved in spending 3 years at Southern Cross Uni, or most of these Bachelors of Business or Social Studies
Peter Patton
15 Dec 10 at 4:36 pm
And any BA program, which graduates students whose scientific and/or mathematical analytical skills and/or knowledge remain stuck at Year 10 level, is not a program benefiting society.
Peter Patton
15 Dec 10 at 4:39 pm
Don’t get me started on the Dawkins travesty known as SCU. I attended a Christmas church service in Lismore once that had a guest sermon from one of their ‘economics’ lecturers one Christmas.
The low end of the gene pool based it on Hamilton’s Affluenza. And bragged about giving her four and five year old nieces a certificate that said they had given someone in Africa a goat. I am sure they appreciated it. And I appreciate, a lot, that she hasn’t bred herself.
One of life’s missions is to make sure my kids don’t go to SCU. I just need to be subtle, or the contrary little buggers might just try it.
entropy
15 Dec 10 at 4:55 pm
Two very salient and powerful counter factuals to these “Degree equals Educated” discourses are:
1. The parliamentary wing of the Greens, particularly la Dumb-Dumber
2. Their multi-degreed constituents.
Peter Patton
15 Dec 10 at 5:06 pm
“The optimal number for a publicly funded university system must be less than 43 percent. Otherwise there wouldn’t be a funding crisis.”
That’s not exactly the greatest definition — Haiti has a funding crisis in its health system, even though they are spending about zero on it as far as I can tell. By this logic, I guess that means zero is over optimum for health spending. Ditto for primary school education.
conrad
16 Dec 10 at 6:28 am
conrad – the UK is hardly Haiti. It has a viable institutional structure that does not involve brown paper bags stuffed with cash to semi-function. The kind of observations we can make about the UK are very diffent to Haiti (and similar failed states).
Sinclair Davidson
16 Dec 10 at 7:16 am
Well said PP at 5.06 pm
Who gives a fuck whether Universtiy education is a public good or not. As good right-wingers, we should advocate the privatisation of Universtiesand a vast reduction in the mickey mouse uni courses.
Rococo Liberal
16 Dec 10 at 8:54 am
Entropy,
The far North NSW Coast is your problem.
It’s a playground and that’s the way it should be.
Hives Hamilton researches at one of those “centres of excellence”.
I know an independently wealthy finance academic who taught at SCU before it was SCU. He wouldn’t truck with such rubbish.
.
16 Dec 10 at 9:51 am
PP:
I’d like to study law outside of the degree programme until I make a pre professional qualification, and do a BA to simply learn stuff I want to know about.
Your enrolment is tempting but the old man won’t truck with law studied any other way.
The entire uni system has problems. The Dawkins’ have their problems – but so do the sandstones, even if to a lesser degree.
.
16 Dec 10 at 9:59 am
The V-C of Sydney University has sent greetings to alumni.
The new Centre for Obesity includes moral philosophers…Who said the humanities are dead?
Spence’s hand gestures are like Tony Blair’s – just a split second out of sync and obviously learned. Taught by a media studies graduate or a moral philosopher?
Ken Nielsen
16 Dec 10 at 10:18 am
The rebranding was a $50 mln exercise in cheapening their brand.
.
16 Dec 10 at 10:28 am
Interesting post. I’d argue that the real winners of our public higher education system is not the students but business (& the public service). They gain more mature, more articulate (well hopefully) and better informed entrants, reducing the training costs on them.
Obviously raising their taxes to help pay for the cost is bad policy, but we need to find a way to get business to hire more people who don’t have degrees, reducing the numbers who do go (especially those who have no aptitude or desire for university education but who need it to get a job. Any job almost no matter how menial).
Howard was right to argue many people shouldn’t go to university. Pricing them out is a rather indiscriminate way, instead we need better options for them other than university to enable them to get good paying jobs. Either better TAFE or more willingness to hire & train from business/public service.
Andrew Carr
16 Dec 10 at 11:51 am
Bring back cadetships.
.
16 Dec 10 at 12:10 pm
dot
I’m not sure what you are getting at here. Are you saying that right now:
1. You’d like to study to become a lawyer, and get an Arts degree along the way?
2. You don’t want to do the law bit via a JD or LLB; you want to via the Law Society’s Diploma program?
3. You do want to do the BA at a uni?
What do you mean by “your enrolment”?
Peter Patton
16 Dec 10 at 12:30 pm
1. Yes.
2. Yes.
3. Yes, and the JD. I’ve thought about.
I went off a tangent but my point was there are non-Dawkins with problems. All of them are backsliding. This may go back to schools. Donald Horne reported that schools were dumbing down content in the 1960s making life hard for university maths profs.
.
16 Dec 10 at 12:33 pm
dot
On the non-Dawkins having problems, you are absolutely correct. The bureaucracy is absolutely mind-blowing; beyond Kafka. The current Canberra micro-managed funding system should be a case study at Harvard Business School to illustrate the principle that when you change the regulations, the main impact is to distort the incentives.
However, as I have been through it all, I can inform advise of the most efficient ways to meet your needs.
Are you mentioning your old man because he is the one who will be funding you? If so, you should listen to him.
1. Law degree. I don’t know where you live, but the JDs at Melbourne, Sydney, and UNSW can be finished in 2 years. The benefits include your classes contain only JD students and no undergrad LLB students. The downside is if you don’t get one of the CSP places, you have to pay full fees of $30,000 pa ($90,000 for the whole degree), deferred via FEE-HELP if you want. But as you have a PhD, you would have little problem getting a CSP place. In which case, you would simply have to pay the normal deferred HECs of $9,000 pa ($27,000 for the whole degree).
2. BA degree This depends on what you want to study.
(i) If you want to mix and match across departments, like a normal BA student can, as you already have an Economics degree, you would be given credit for 1 year for a BA, meaning you could get your BA in 2 years.
(ii) Alternately at U.Syd, you could take a 1 year Diploma of Arts, which is offered to people who already have an undergrad degree. It requires you take a full major in one subject, but little to no flexibility to take subjects out of that. It is meant for people who want to take the equivalent of a full major, to enable them to qualify for entry into Honours years, Masters programs, etc in a completely different area than their previous studies. You pay undergrad HECS, which I think is about $5,000 pa
Therefore, going down the BA/JD route, all up it would take you 4 years, or only 3 years for the JD/Grad. Dip route.
Peter Patton
16 Dec 10 at 12:58 pm
“conrad – the UK is hardly Haiti”
If you want a normal example, then take the reverse condition, where something is well funded, like, for example, all the middle-class welfare perks we get (e.g., the Medicare rebate). Obviously these are optimal because most people are not complaining about them and the government’s happy to fund them.
Given the above, it just doesn’t make sense to argue that something is well/not well enough funded based on how much the government wants to fund it and whether people complain.
For all I know, Australia could be bursting with riches in 20 years if we had a 50% participation rate entirely paid for by the government, or, alternatively, perhaps there is no benefit over 20%. Beats me, but before claiming something is/isn’t optimally funded, this is really the type of question you need to answer.
conrad
16 Dec 10 at 1:13 pm
“Are you mentioning your old man because he is the one who will be funding you? If so, you should listen to him. ”
He’s talked it up so now I have a preference for it.
“But as you have a PhD”
Not yet, that is flattering but I feel like a fraud when people think that.
.
16 Dec 10 at 1:15 pm
Well, you have finished a degree, plus honours/masters; same thing for the purposes here.
Peter Patton
16 Dec 10 at 1:30 pm
There is a great deal of fiscal illusion associated with medicare. The medicare levy financed a very small portion of the medicare system with the rest coming from general revenue. Small wonder few complain – they don’t know how much it costs.
Sinclair Davidson
16 Dec 10 at 2:52 pm
Sinc – but is there any data suggesting we really are deluded on what Medicare really costs? I have done nothing like any academic research on this, but my basic inquiries suggest the bang Australians get for their healthcare buck – via Medicare – is highly competitive internationally.
Peter Patton
16 Dec 10 at 2:59 pm
PP – people think that they pay 1.5%.
Sinclair Davidson
16 Dec 10 at 3:04 pm
Sinclair – this is why I prefer a GST alone to fund the public purse – an explicit tax rate of 45% (probably enough to fund current spending and liabilities) would make most people scream blue murder.
.
16 Dec 10 at 3:24 pm
the risk is that university might be an expensive way of selecting people for jobs and is overused because the cost is heavily subsidised. i’ve noticed that some economists are starting to make the argument that some education might impose a net negative externality on society and should be taxed rather than subsidised
ben
21 Dec 10 at 7:11 am