More students are going to university than before, but those at risk of dropping out need more help
- Written by Andrew Norton, Higher Education Program Director, Grattan Institute
Enrolments to Australian public universities boomed during the last decade. This was due to a government policy known as “demand driven funding”, which between 2012 and 2017 allowed universities to enrol unlimited numbers of domestic bachelor-degree students.
In 2017, 45% more students started a bachelor degree than a decade earlier.
Boosting higher education participation rates, particularly for students from lower socioeconomic backgrounds, was one of the policy’s aims. But the Productivity Commission has today given the demand driven system a “mixed report card”.
The report estimates that six in ten school leavers now go to university by age 22, up from a little over half in 2010. But student outcomes deteriorated from their pre-demand driven peaks. Drop-out rates increased while employment rates decreased (although the most recent data suggests positive trends).
Read more: Graduate employment is up, but finding a job can still take a while
It’s important to note, however, that higher education participation rates have been trending up in Australia and around the world for decades, despite significant differences in funding policies. Demand driven funding just led to a particularly quick surge in Australia.
As student enrolments in university are likely to increase, so are the downsides that come with this. The system needs to put in place better measures to help students at risk of dropping out.
The Productivity Commission’s report
Many of the broad conclusions of The demand driven university system: a mixed report card are not new. But the Productivity Commission explored them in depth by tracking young Australians through their final years of school and up to age 25, using the Longitudinal Surveys of Australian Youth (LSAY).
The report used the LSAY data to perform what’s known as a multivariate regression analysis to calculate the “additional students” – which are the students who probably wouldn’t have gone to university without demand driven funding. It compared them to “other students”, who would have enrolled anyway.
Additional student analysis can be useful because, at a system level, good outcomes can hide poor results for more vulnerable groups of students.
The analysis revealed significant differences between the two groups. Nearly three-quarters of additional students had no ATAR or an ATAR below 70, compared to just over one quarter of other students.
Additional students were more likely to come from a low socioeconomic status background (which was one of the aims of demand driven funding), to have attended a government school, and to be the first in their family to attend university.
But additional students were less likely to come from a regional area.

Authors: Andrew Norton, Higher Education Program Director, Grattan Institute