The rising place of deregulated student fees in Australian university life

by Andrew Norton

Student fees now comprise a fifth of public university funding – almost $6 billion a year – according to a new background paper from Grattan Institute’s Higher Education Program.

University fees: what students pay in deregulated markets shows that in 2013 about $4.3 billion of these fees were paid by international students. The rest were paid by domestic students, with postgraduate students paying more than $900 million.

Last year 312,500 international students were enrolled in Australian universities, nearly twice as many as in 2001. They comprise nearly a quarter of all enrolments.

The paper shows that annual median international undergraduate fees range from $21,000 to $28,000, depending on discipline, but that many students prefer more expensive universities, even when they charge twice as much as the cheapest universities do.

However, Australian students are far less willing than international students to pay a large premium for entry into prestige universities, according to Higher Education Program Director Andrew Norton.

“Australian students know that research rankings are not a reliable guide to graduate quality. And Australian employers know this, too, from having hired graduates from many different universities,” Mr Norton said.

In high-cost disciplines such as science and engineering, universities receive only a little more per student from international undergraduate fees than they do for domestic government-supported students. But they receive twice as much from international undergraduate students in low-cost disciplines such as commerce and arts.

The paper finds that in the domestic postgraduate market, by contrast, universities do not always take a commercial approach to setting fees, choosing instead to charge lower amounts for some courses to fulfill their social mission.

In some fields, such as nursing, it is not unusual for universities to receive less from a fee-paying student than from a Commonwealth supported student.

More than half of all bachelor-degree international students study commerce, with engineering the next most popular course.

By contrast, the most popular courses for domestic undergraduates are in the society and culture category, which includes arts and law degrees. Only 18 per cent of domestic bachelor-degree students take commerce-related courses.

A future Grattan report will explore what profits universities make on fee-paying students and the policy implications of what happens to the money.

Read the paper

For further enquiries:
Andrew Norton, Higher Education Program Director
T. 03 8344 3637 E. andrew.norton@grattan.edu.au