Overview

1. Why is the Australian Government reforming the way it funds higher education?
2. What principles underpin the reforms to higher education?
3. Why is the Australian Government changing the way it funds courses and students?
4. What are the main changes?
5. When will the new course and student funding arrangements start?

1. Why is the Australian Government reforming the way it funds higher education?

In 2002, the Federal Government undertook a review of the Australian Higher Education Sector. The central finding of the Higher Education Review was that the present framework for funding and policy has become unwieldy, complex and inequitable.

2. What principles underpin the reforms to higher education?

The Australian Government needs to ensure that the policy framework for Australian higher education allows the sector to meet the demands that are placed on it, both now and into the future. Our Universities: Backing Australia’s Future is an integrated package of reforms that reinforce four key principles: Sustainability, Quality, Equity and Diversity.

Sustainability

All existing public self-accrediting higher education institutions must achieve long term sustainability. The cost of course provision in higher education has increased considerably, often due to factors outside the control of universities such as increased global competition for academics in key areas and changes in the value of the Australian dollar. Universities must be freed from unnecessary constraints. They should be able to respond flexibly to the needs of their constituencies, including potential and existing students, staff, employers, industry, local, regional and national communities. Institutions need to be given maximum opportunity, consistent with public accountability and social responsibility, to develop innovative responses to rapidly changing environments in teaching and learning, in the direction and commercialisation of research, and engagement with industry, research institutions and other education providers.

Quality

Australia’s universities have a reputation for providing high quality educational experiences, and it is vital that this be maintained and enhanced. A renewed emphasis on teaching and learning outcomes, particularly at the undergraduate level, will help to ensure that students develop knowledge and skills that are relevant to their own needs and to those of employers, professional associations, labour markets and society.

Equity

Systemic barriers to the participation of historically disadvantaged groups, in particular Indigenous Australians, must be addressed. Individuals should be enabled to fulfill their potential, regardless of their personal circumstances and backgrounds. Targeted intervention measures and new approaches to student financing will seek to encourage participation and retention of under-represented groups.

Diversity

Australia needs a high quality higher education sector with a range of institutions servicing different communities and varied requirements. It is neither necessary nor desirable for all universities to be the same. A more diverse system will be achieved by institutions forging distinct missions within the overall system and through greater collaboration between individual universities and other education providers, industry, business, regions and communities.

3. Why is the Australian Government changing the way it funds courses and students?

Currently, the Australian Government gives universities and other higher education providers, such as the University of Wollongong, large block grants and then requires most students to contribute to the cost of their higher education through the Higher Education Contribution Scheme (HECS). The Australian Government currently sets HECS rates for students depending on the disciplines they study, but otherwise the rates are the same at all publicly funded higher education providers. The Australian Government always gives more money to the sector than providers receive from student contributions.

It is now recognised that there is a lot of diversity throughout the higher education sector. Different providers have different strengths, specialties and cost structures. There are also differences between courses that are in the same discipline but offered at different institutions. For example, a degree at one provider may have a strong theoretical focus, while the same degree at another provider may be more practically orientated. The Australian Government believes that diversity is a very positive feature of the higher education sector, because it enables providers to build on strengths and allows greater student choice.

4. What are the main changes?

Course Funding Arrangements

The University of Wollongong will no longer be given block grants. Instead, the Australian Government will pay for the courses actually delivered to students. How much the Australian Government will pay per course will be specified in the Commonwealth Course Contribution Schedule. This is money that the Australian Government gives to providers, on behalf of students, to contribute to course costs. Students do not have to repay this money to the Government.

The Australian Government only makes a contribution towards courses for Commonwealth Supported Students.

The Commonwealth will provide a Student Learning Entitlement (SLE) to students so that they can access a Commonwealth supported place for up to seven years equivalent full-time. Additional SLE will be available for students undertaking an undergraduate course that is longer than six years, or an honours course, graduate entry bachelor degree or postgraduate course. SLE will provide greater opportunities for more students to gain access to a Commonwealth supported higher education place as new entrants occupy places freed by students who have consumed their SLE.

Student Funding Arrangements

Students currently contribute to the cost of their courses through the Higher Education Contribution Scheme (HECS). The Australian Government sets HECS rates and students either pay these when they enrol or later through the income tax system. Under the new arrangements, the Australian Government will no longer set student contributions. Instead, higher education providers will set the student contribution levels for each of their courses within ranges set by the Australian Government.

The Australian Government will establish a Higher Education Loan Program (HELP) so that eligible students can either pay their student contribution when they enrol, or later through the income tax system.

There are three types of loans available under HELP:

1. HECS-HELP for eligible Commonwealth supported students;
2. FEE-HELP for eligible fee paying students at public and eligible private higher education providers; and
3. OS-HELP for eligible Commonwealth supported students who want to study overseas.

There will also be changes to the following, which will become FEE-HELP:

1. Postgraduate Education Loan Scheme (PELS);
2. Open Learning Deferred Payment Scheme (OLDPS); and
3. Bridging for Overseas Trained Professionals Loan Scheme (BOTPLS).

The discounts available for up front student contributions and the bonuses available for voluntary repayments will change for all new and current students.

The HECS repayment thresholds, which also apply for PELS, OLDPS and BOTPLS debts, will also change.

New scholarships will be available under the Commonwealth Learning Scholarships Program. These scholarships will be available from 2004 and will help students with accommodation and educational expenses. See information on Equity and Community Scholarships.

5. When will the new course and student funding arrangements start?

The new course and student funding arrangements will start on 1 January 2005. Most current HECS students will be able to continue studying under the current HECS rates and eligibility requirements until the end of 2008. Most current PELS students will be able to continue studying under the current eligibility requirements until the end of 2008. See current students page for more information on these arrangements.

The changes to discounts, bonuses and the repayment schedule will apply to all new students, current students and all former students with HECS, PELS, OLDPS and BOTPLS debts from 2005.

The Australian Government will establish a Higher Education Information Management System (HEIMS), which will allow the administration of its new course and student funding arrangements. Students will be provided with a Commonwealth Higher Education Student Support Number (CHESSN) and will be able to use HEIMS to access information such as course availability, course entry criteria (such as the previous year’s admission cut-offs), course fees and Commonwealth course contributions.

Last reviewed: 5 March, 2008