higher education funding

O’Shea: All I want for higher education now and tomorrow

Fresh from delivering a widely-applauded keynote at this year’s HERDSA conference, Fragility or tenacity? Equity and participation in the pandemic university (read it, it’s fantastic), Professor Sarah O’Shea of the National Centre of Student Equity in Higher Education at Curtin University shares her hopes and visions for the sector’s future.

My first face-to-face conference in over two years has given me pause to consider the many changes and challenges the university sector has encountered in the last years. The onset of the pandemic both exacerbated existing issues within the sector as well as revealing a whole gamut of new complexities related to funding sources, precarity of employment and systemic injustices for equity-bearing students. 

We are not yet post-pandemic and there are many things  the onset of the health crisis has revealed. It showed us COVID was never simply a health issue but required a much broader social response. 

Indeed, key to how we emerge from the pandemic will be our education systems, particularly the higher education setting. With this in mind I offer a personal wish list of changes needed in the system, to better serve the students and staff therein:

  • Linked to the previous point is the need to revisit the removal of Commonwealth financial support for those students who do not manage to maintain ‘an overall pass rate of 50 per cent’ across their studies (DESE, 2021). We know that many students from equity backgrounds may initially fail some subjects as they navigate the university system but still go on to succeed academically. Pedagogically, failing can often result in key points of learning and students should never be penalised financially as a result.
  • Recent research has indicated the high cost of ‘investment’ universities make to support and retain the equity student cohort. These costs are often borne by those institutions located in regional areas or who have committed to a mission to open up educational pathways for disadvantaged communities. Such work is laudable and deserves to be funded in ways that recognise the variable nature of investment required in different communities and locations.
  • The precarity of academic employment has always existed but its visibility and impact has become more visible since the onset of COVID-19. I hazard a guess that most of the readers would know of colleagues who have either not had a contract renewed or have been ‘restructured’ out of the organisation. A recent report has highlighted how tertiary education topped national job losses (39%) across Australia, but again, if Australia is to navigate its way out of the current health situation then securing and rewarding university staff is a requisite need moving forward.
  • Finally and fundamentally the current ‘business model’ of the university sector needs to be challenged and revised. The level of public investment in the sector has declined to just 52% of university revenue, which has led to an untenable funding model characterised by an over-reliance on international student fees derived largely from two markets (China and India), a situation identified as problematic even by the Tertiary Education Quality Standards Agency (TEQSA) 

COVID has irrevocably disrupted the existing and accepted business model of higher education, but embracing this disruption will ultimately assist in reimagining this system. Identifying and addressing the enduring and emerging pressure points in the system, provides an opportunity to strengthen the resilience of Australian education systems. We know developing robust and inclusive higher education environments will be key to adapting to new and unforeseen challenges in the future. This is challenging work but  confronting the deficiencies of the current system will ultimately enable us to ‘build back better’.

Sarah O’Shea is a Professor and Director of the National Centre of Student Equity in Higher Education at Curtin University. Sarah has over 25 years experience teaching in universities as well as the VET and Adult Education sector, she has also published widely on issues related to educational access and equity.

Ditch the widgets. Start investing in their amazing futures

The cost of teaching a student from a low SES background is significantly higher than for more advantaged students. The reasons for these costs include the ‘obvious’ assumptions, such as bursaries, but are likely driven more substantially by infrastructure investment by a number of universities specifically supporting campuses in areas and regions as part of their mission to provide a university pathway as an option to a diverse range of our population.

We believe this investment (a better way of thinking about it than ‘cost’) could be better recognised in funding agreements by switching the focus from ‘activity-based’ funding (i.e. “count your widgets, take your dollars”), to ‘mission-directed’ funding (i.e. recognition of the social impact and additional resources that these contributions require and perhaps redirecting funding from the low cost ‘low hanging fruit’ approaches of some).

Who are we and how did we discover this? A team of researchers spanning multiple universities (Victoria Uni, ANU, Curtin RMIT) and ACER published an article exploring the costs associated with supporting students from low socioeconomic status (SES) backgrounds in university. Our study has a ridiculously complex methodology – using econometric modelling to explore the economies of scale in relation to the costs of educating students in Australian universities, with ten years of financial, enrolment and employment data from 37 universities, and then exploring the outcomes with people who run universities across a range of states – but when you pare it all back, a relatively simple set of findings:

Here’s an overview.

Quantifying costs and differences in costs

First we compiled a large dataset spanning all Australian universities across 10 years. The dataset contained operating expenditure, student enrolments, level of enrolment, field of education and background characteristics of students, teaching costs, research grants, location of university and type of university. This was analysed using an econometric model to identify the average costs for each student, and to explore if there are economies of scale in enrolling some groups of students – in other words, does the average cost decline the more of a group of students you enrol? 

The stark finding (that we checked and re-checked) was that when all other elements are controlled for, the average annual cost for a student from a low SES background at undergraduate level was about 6 times higher than for a student from a medium or high SES background. The difference was slightly lower for postgraduate level students, but nonetheless, it was still a notable difference.

However, the other aspect of the analysis did show that there are economies of scale in enrolling students from low SES backgrounds at undergraduate level – that is, the higher the number of students of this background, the lower the average costs per student become. We also found the opposite (i.e. a diseconomy of scale) for medium and high SES student enrolments.

Explaining the differences

We took our data findings ‘on the road’, visiting four diverse universities in Australia to talk with academic, finance and student support leaders. We wanted to test whether the outcomes from the analysis made sense on the ground and found that while views differed, some key explanations were clear:

  • The kind of additional support needed by students from low SES backgrounds includes: outreach support to raise aspiration and relevant individual capital prior to enrolment; academic, personal and financial support while at university; and in some cases, support to care for students with highly complex needs.
  • The support factors that contribute to the additional costs include investment in the items listed above plus the costs of establishing, maintaining and appropriately staffing multiple and/or regional campuses, particularly but not only those located in highly disadvantaged communities. Further, it was found that universities that are strongly prioritising or enacting missions to address disadvantage have higher costs than universities with other missions.
  • Additional support costs are not the same for all low SES students. Low SES students are not a homogeneous group. Depending on their particular background and circumstances, low SES students may experience different levels of disadvantage and/or multiple disadvantage.

In the universities consulted, there were different costs and different approaches to supporting low SES students. This was partly because of the differences in the universities’ missions, the number and geographic locations of campuses and the characteristics of the particular low SES students for whom support was being provided.

Future considerations on funding

We hope that what this research does is help to highlight the difference in investment required depending on the backgrounds of students enrolled in a university. The emphasis in shifting language from ‘cost’ to ‘investment’ is intended as a means of changing views and perceptions – much the way in which some universities in Australia embed in their mission an aim to open up opportunities by investing in areas or communities where previously a university pathway was not a consideration.

A radical, yet seemingly logical, proposition coming from this research is that if some student groups need a greater investment than others, then perhaps the funding pie should be cut in a way that recognises the variable investments required. From our work, we feel that consideration of ideas to recognise the various missions of universities and the different students they serve in following their mission could be captured in funding allocations. Ideas we have suggested for further consideration include a redistribution of funding based on need; shifting emphasis from activity-based to mission-directed costing; applying the principles of ‘cost compensation’; and conceptualising funding support for students from low SES backgrounds as a transformational investment that can improve outcomes for individuals, communities and society, rather than as a cost.

Dr Daniel Edwards is the Director of the Tertiary Education Research Program at the Australian Council for Educational Research, and an Honorary Senior Fellow with the University of Melbourne’s Melbourne Centre for the Study of Higher Education. Daniel Edwards (ACER) wrote this post on behalf of the project team: Marcia Devlin (VU), Liang-Cheng Zhang (ACER), Glen Withers (ANU), Julie McMillan (ACER) and Lyn Vernon (Edith Cowan University)