The Job-ready Graduates scheme for uni fees is on the chopping block – but what will replace it?

On Wednesday, Education Minister Jason Clare released a much-anticipated report on universities. This is the interim report of the Universities Accord review.

The review, commissioned in November 2022 and led by Professor Mary O'Kane, has been tasked with creating a “visionary plan” for Australian higher education. It is examining everything from university governance, to research, teaching, international students and student wellbeing.

But one area of great interest is what will happen to the fees students pay to attend university. For domestic government-supported students, these are called “student contributions”.

The government and the review panel are also emphasising equity of access to higher education and the report suggests major changes to how university funding works. These changes would be invisible to students, but the goal is more people from disadvantaged backgrounds enrol in university and complete their degrees.

Read more: The universities accord could see the most significant changes to Australian unis in a generation

Student fees are set to change (again)

The interim report confirms the Job-ready Graduates scheme for student fees be scrapped. This was introduced in 2021 by the Morrison government.

It was intended to steer students to courses that matched labour market demand (such as teaching or nursing) or other national priority areas (such as mathematics and foreign languages). Student contributions for these courses were discounted.

Other courses, notably arts degrees, saw price increases. The cost of most subjects more than doubled.

But this does not work. Along with other higher education policy analysts, I argue student contributions only have small effects on student choices. The main practical consequence is some students will be burdened with HELP debts that take decades to repay, if they ever are repaid.

The accord review panel agrees, noting:

the continuation of these current arrangements risk causing long-term and entrenched damage to Australian higher education.

Narrowing the list of alternative systems

The review panel has delayed any firm recommendations on what will replace Job-ready Graduates until its December 2023 final report, but some version of a multi-rate system looks set to return.

So what happens now? One option is to reverse the worst of Job-ready Graduates, and take arts students and others affected by high student contributions back to their old rates. But this would be a disappointing response for a review supposed to come up with “big ideas”. As the interim report observes, a simple reversal would “cost in the order of A$1 billion a year”.

Some university interest groups suggest going back to a flat student contribution rate, where every student pays the same fee. This was the system between 1989 and 1996. Students in longer degrees would still pay more, but the annual fee would be the same regardless of course.

Without fully ruling it out, the accord panel says this “risks unfair trade-offs”. Indigenous, regional, low socioeconomic status and female students would all pay more on average than they do now. This is because they are more likely to take courses that are currently discounted under Job-ready Graduates including nursing, teaching and agriculture.

Read more: The Universities Accord should scrap Job-ready Graduates and create a new multi-rate system for student fees

My proposal

Other interest groups favour a system where student contributions are linked to expected future income. The interim report mentions this in a neutral way.

The interim report does not directly mention my variant of this, which is also based on expected future incomes and aims to narrow differences in HELP repayment times between courses.

This would require a greater focus on the total average debt a student accumulates before starting full-time work – recognising some courses take longer or are more likely to involve additional study.

My proposal would also take into account varying patterns of post-study income. Graduates of some courses can walk straight into well-paid jobs, while others take longer to find work and have lower initial salaries. These factors can have significant effects on repayment times.

More higher education opportunities

Two key goals for the accord are to expand the higher education system to meet labour market skill needs and to provide more opportunities for people from disadvantaged backgrounds. The interim report suggests a target of parity in participation rates between the general population and people classified as low socioeconomic status, living in a regional area or with disability by 2035.

This is very unlikely. As Clare pointed out in his National Press Club speech on Wednesday, school results for some disadvantaged groups have been going backwards in recent years. He has other school-focused reviews to address this, but the interim report cites no evidence such rapid change could be achieved in just over a decade.

They do, however, have many ideas for expanding opportunity. While short on detail, they propose a “universal learning entitlement” for tertiary education, including vocational and higher education. Currently anyone who meets university entry criteria is eligible for a government subsidised place and a HELP loan, but whether they receive it depends on whether a university will accept them.

As an interim measure, the government is lifting funding caps for all Indigenous students, not just those in rural and remote areas.

The accord panel also suggest the funding rate a university receives per student might be linked to student as well as course characteristics. This already happens in the school system. Existing higher education programs distribute fixed amounts of money between universities based on their share of enrolments of disadvantaged groups. But this funding is not linked to additional teaching and support costs.

These costs are potentially very large. They would also require substantial revision of current definitions of disadvantage. Two equity groups – low socioeconomic status and regional – are based purely on geographic measures.

They are OK as rough indicators of broad trends in the sector, but they are well-known to misclassify the disadvantage level of individual students. To reach the people who need help, we will need more precise indicators.

What now?

There is a huge amount of work and debate to happen between now and the end of the year. The interim report calls for advice on more than 70 policy ideas over 150 pages. The accord panel and Clare say they are are keeping their minds open. In his National Press Club address Clare specifically invited critique and alternatives.

Submissions containing these – or offering support – are due by September 1.