UC loses approx. $1.8m due to government funding freeze

Just a few days before Christmas last year, the Government released the Mid-Year Economic and Fiscal Outlook (MYEFO) introducing policy changes which will see significant cuts to higher education across Australia while simultaneously forcing students to pay a greater share of costs.

Now, it’s worth backtracking a little bit here, as there are some contextual details which are important to note. In May last year, when the Federal budget was announced, the Government announced a package of measures that it argued would result in a more sustainable funding model for universities.

Within this package, student fees would have increased gradually over a number of years. This also would have resulted in funding cuts for universities through the annual reduction of available resources, though the precise details of this were never made clear. In total, the measures would have saved Australia $2.7 billion in higher education spending.

To enact these changes, the Government required the support of other parties in order get the legislation through. After both the Labor party and the crossbench refused to pass the education savings package, the Government had to re-think its approach.

Late last year, rather than pushing for their original proposal to be reconsidered, the Government instead reversed the legislative elements of the package and implemented a freeze on university payments – a move that doesn’t require Senate approval or legislation.

Although the re-vamped savings package cuts about $550 million less than the changes proposed in May, the repercussions for both universities and their students aren’t that much better.

What are the proposed reforms to higher education?

The MYEFO report outlines the following changes to higher education:

  • As of the 1stof January, Commonwealth Grant Scheme (CGS) funding has been frozen and is set at the 2017 levels.
  • CGS funding will increase from 2020 onwards by the growth rate of the 18-64-year-old population, but only for universities which meet the performance targets they set. The details of this are yet to be announced.
  • A combined limit has been set for all tuition fee assistance under HELP and VET Student Loans, resulting in fewer students being able to attend higher education.
  • An alternative HELP repayment threshold will be pursued, with a new minimum of $45,000. This will result in graduates having to pay back their loans sooner and on a lower income.
  • Remove 3,000 funded postgraduate student places, and cease funding for over 1,000 student places which were put in place to meet priority skill and regional needs.
  • Change the allocation of places for diplomas, associate degrees and postgraduate courses to reflect institutional outcomes. The details of this are yet to be announced.

What does this mean for UC?

According to a recent message from the Vice Chancellor Deep Saini on his blog, Deep Thoughtsthe most significant change for UC will be the in the way that it is funded. As a result of the freeze on the Commonwealth Grant Scheme, UC’s funding will be capped at the level it received last year, regardless of predicted growth.

Although it is not yet certain at this stage what the exact impact of this will be, assuming that UC achieved its project enrolments for 2018, the University would receive approximately $1.8 million less than it had already factored into its 2018 budget, meaning that cuts will need to be made somewhere.

In his blog post, the Vice Chancellor stated that UC would need to “make a number of decisions over the coming weeks to address the impact of these changes.”

“Whilst we will need to consider the strategies around our income streams, the management of our expenses, and judicious deployment of our resources is more important than ever,” he said in the post.

“The impact for 2019, if no change is made, is even greater [than this year]; potentially doubling the shortfall that is projected for 2018.”

The University’s new strategic plan Distinctive by Design outlines, among other things, their plans to increase financial sustainability for the university. However, its plan to “expand total enrolment” may be impacted by MYEFO as a result of the changes to CGS. As a result of the capped funding, any increases to student places will be borne by the University rather than the Government.

What about students more specifically?

Well, unfortunately for us, it’s sounding like students are going to be hit pretty hard, particularly in regard to their HELP and ABSTUDY loans. In short, these are the loan schemes that most students in Australia use to pay their student contribution and tuition fees.

At the moment, these aren’t required to be repaid until you reach the earnings threshold of $55,874. Under the proposed changes to higher education, it will become compulsory to repay your loans once you start earning $45,000 a year. Thankfully, this will be phased in, meaning that if you do happen to earn $45,000, you’ll only repay 1% of your loan annually.

In addition to the lowered repayment threshold, MYEFO also outlines a new measure which would cap the amount of loans students can acquire over their lifetime. Basically, if you rack up a debt of over $104,000 (unless you’re studying medicine, dentistry or veterinary studies) you’ll be rejected for any further student loans.

Unlike the freeze to CSG funding, both of these measures do require Senate approval. This approval will be sought by the Government from the 1st of July 2018.

Published in Curieux Magazine. Photo by Aditya Joshi on Unsplash

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