University students will pay more than double to study arts degrees – but much less to do nursing, teaching, mathematics and science – as the federal government shifts higher education funding to encourage graduates into jobs most in demand.
The cost of studying maths or agriculture at university will fall by to 61 per cent as the government raises its subsidy, while courses not directly leading to jobs will cost students more – humanities students will pay 113 per cent more for their degrees.
The changes are grandfathered for existing students but effective immediately for all new students – subject to legislation. The fee for nursing and teaching will fall by 45 per cent and for science by 23 per cent.
Students will still have to borrow the money but the upfront cost and subsequent debt repayments will be sharply lower.
Law, economics, management and commerce degrees will be more expensive for students following data that says demand for these jobs is lower. A law degree will cost the student 28 per cent more than at present.
In a speech today, Education Minister Dan Tehan will say the government wants to “incentivise students” to make more job-relevant choices that lead to more job-ready graduates.
“Students will have a choice. Their degree will be cheaper if they choose to study in areas where there is expected growth in job opportunities,” Mr Tehan said.
“We are putting more funding into the system in a way that encourages people to study in areas of expected employment growth.
“We are facing the biggest employment challenge since the Great Depression. And the biggest impact will be felt by young Australians.
“They are relying on us to give them the opportunity to succeed in the jobs of the future.
“A cheaper degree in an area where there’s a job is a win-win for students. And as I said earlier, when graduates succeed our country succeeds.”
University courses are paid for by students and the government. Under this reform the government is changing its share – the subsidy it pays for courses. Most students borrow their fees (the “student contribution”) from the government, paying it back only when their income hits a certain threshold.
Earlier this week, The Australian Financial Review revealed demand was soaring for university places as COVID-19 pushed up unemployment.
Under the new scheme, the number of additional places is a modest increase of 39,000 by 2023.
Mr Tehan said the focus was on making sure universities produced graduates which were in demand for the post-COVID-19 economy. He said there had been a misalignment between the cost of teaching a degree and the revenue universities got to teach it.
Anticipating pushback from the higher education sector, he said 60 per cent of students will see a reduction or no change in their student contribution.
“Students will still pay less for those degrees in Australia than they would for a similar degree in similar countries, like the USA and the UK.” he says.
The changes will happen at a subject level which means students who do combination degrees will lessen the impact of the changes.
“Students studying arts can still reduce their total student contribution by choosing electives in subjects like mathematics, English, science and IT within their degree.”
The minister said the changes did not involve fee deregulation and in a nod to previous dramas over escalating degree costs he promised, “this does not mean $100,000 degrees”.
When education minister Christopher Pyne tried to deregulate degrees the Coalition was swamped by criticism that degrees for subjects like law would hit six-figure sums. The changes were so unpopular they were subsequently abandoned.
Universities have been struggling with the impacts of COVID-19. The University of New South Wales is expected to have a revenue shortfall of as much as $600 million this year as foreign students stay away and other Group of Eight universities have short falls of up to half a billion dollars.
Most universities had been hoping the education minister would deal with the problem of international revenue, research funding and excessive domestic demand.
In his speech the minister makes no mention of international students or research spending.
He says the new fees structures fit a pattern he established a year ago when he introduced performance-driven funding. This rewards those universities successfully getting students into jobs with higher allowances for new student places.
On Friday Mr Tehan will publish data showing graduates from vocationally oriented degrees such as engineering, education and IT have employment rates above 75 per cent.
Among degrees that will be less expensive is clinical psychology which will be 46 per cent cheaper for students.
This story originally appeared in the Australian Financial Review.