The rewards of vocational education need to be better known
Published at The Australian, Wednesday 14 August
While higher education policy languishes, the federal government is engaging with vocational education. The budget handed down in April announced new federal bodies to promote vocational education. Scott Morrison wants to raise vocational education’s status, announcing last week that “TAFE is as good as university”.
In the short term, the vocational education focus is bad news for universities hoping for a resurrected demand-driven system. Higher education is not the funding priority. But a strong vocational system complements demand-driven funding, ensuring the full range of student and employer needs can be met.
One criticism of demand-driven funding is that it brought more lower ATAR students into university than was in their own interests. Although I support demand-driven funding, this criticism should be taken seriously. Demand-driven funding is better overall than its likely alternatives, but that does not mean it is without flaws or weaknesses.
The Grattan Institute higher education report Risks and Rewards: When is Vocational Education a Good Alternative to Higher Education? looks at whether lower ATAR school-leavers have better alternatives to higher education in the vocational education system.
The short answer is that some of them probably do. But the longer answer acknowledges that for others, especially women, higher education is likely to be their best choice.
The report analyses the relationship between ATAR and income after graduation. Graduates who had higher ATARs don’t just get better access to degrees such as law or medicine with high incomes, on average they also earn more than other graduates with the degrees in the same field. But for lower ATAR school-leavers, high ATAR graduate outcomes aren’t the right comparison point. They cannot choose a high ATAR after Year 12. They can select only from their realistic options.
The report uses course preferences from university applications data to identify realistic fields of interest that also have courses in vocational education. Diverse preferences indicate a range of interests, along with the uncertainty of many young people. Subsequent dropping out and course changing also suggests they are open to ideas other than their original course choice.
From this data, the report finds that some male science bachelor degree students are also interested in engineering. Engineering-related courses at a certificate III or above level can lead to jobs that pay more than a lower ATAR male school-leaver is likely to earn with a science degree.
Similarly, male arts bachelor degree applicants preference commerce courses. Men with some vocational education business diplomas could earn more than the average lower ATAR male arts graduate.
Women’s realistic choices are different. Few women enrol in engineering-related courses in higher or vocational education, and when they do the potential financial rewards often never arrive. Male-dominated industries can be tough for women. By contrast, two bachelor degrees popular with lower ATAR women, teaching and nursing, offer better employment and earnings prospects than their likely vocational alternatives. Teaching and nursing have high professional employment rates across the ATAR range.
Although only some lower ATAR students would be better off in vocational education, public policy could help alert them to good opportunities. School careers advice is patchy. According to a survey for the Joyce review of vocational education, which was released earlier this year, some young people aspiring to jobs served by vocational education plan on going to university.
The proposed new National Careers Institute could help clarify options and steer students in the right direction.
The hardest issue to fix in student choice is funding. Vocational education can be cheaper than higher education, including some free courses. Victoria offered 50 free TAFE courses this year and NSW is introducing a similar policy. But history suggests these policies will not be stable. Overall funding policy remains biased against vocational education. The commonwealth, the states and the territories all have a role in subsidising vocational education courses. Despite calls for national consistency agreement is difficult, as last week’s Council of Australian Governments meeting confirmed. The funding cuts of recent years are unlikely to be fully reversed in the near term.
The VET FEE-HELP debacle has made the commonwealth a cautious, and probably overcautious, vocational education lender. Trade Support Loans and VET Student Loans have limited eligibility and low borrowing caps, which can leave students paying gap fees out of their own pockets. In higher education, few students need pay any tuition fees upfront.
For low ATAR students who can get into vocational or higher education, financial factors could sway their choice. If higher education offers no upfront fees and vocational education does not, nobody could blame a student for choosing a university course — even if it is not their best option for future employment.
The commonwealth’s renewed interest in vocational education will probably provide some benefits. But we are far from policies that support students in equitable ways across the tertiary education system.