University Subsidies: Do Graduate Winners Need Another Prize?

The balancing act! marsmet471

Ok readers,

The article below is highly controversial - what are your views? Is this just more neo-liberal, managerialist dribble, or is it the basis of sound policy? Your comments are very welcome!

Dr Robert Muller.

by Andrew Norton, Program Director, Higher Education at Grattan Institute, The Conversation: http://theconversation.edu.au

After releasing my report, Graduate Winners: Assessing the public and private benefits of higher education, the question I have most been asked is: if university fees go up, will students still come?

It’s a good question. The federal government currently spends around $6 billion a year on the assumption that the answer is “no”. But if the answer is “yes”, that is $6 billion that could be better spent on something else. Like current policy, Graduate Winners assumes that it is higher education’s private benefits that draw students to higher education.

While students are attracted to courses and careers that involve helping others, we probably would not have 1.2 million higher education students in Australia without significant private benefits. Potential private benefits include access to better jobs, higher incomes, and interest in the subject matter.

The difference between my report and current policy is that we think these private benefits on their own will usually attract students to higher education. Current policy assumes that we need to add to these private benefits by offering a tuition subsidy as well.

Using the 2006 census, Graduate Winners estimates the lifetime incomes of people with a range of bachelor degrees. From this we deducted what a middle-earning person with a year 12 education would receive and income tax. And from this we took out the original cost to the student of their higher education, including time spent out of the workforce, student contributions (HECS), and other education costs. The resulting numbers give us net private financial benefits.

These ranged from very high, in the case of medical and law graduates, to quite low, in the case of graduates in the humanities and performing arts. Because incomes vary a lot within as well as between disciplines, we also calculated a “break-even point” how well a graduate needs to do within his or her field before recovering costs and coming out ahead of someone with year 12 education.

The most common breakeven point is around the 30th percentile. That is, 70 out of 100 graduates in many disciplines do better than someone with year 12. The breakeven point is much lower if we only count people working full-time.

97 out of 100 graduates with a medical degree in 2006 were financially ahead of someone with year 12 only. In the humanities, 75 out of 100 graduates were better off. While that is obviously much more risky than medicine, it is still good odds for a degree that does not lead to any specific career.

The report also investigates what effect tuition charges on net private financial benefits. That is, if prospective students had a general idea of what they might earn in future, what impact should tuition charges have?

To read further, go to: http://theconversation.edu.au/university-subsidies-do-graduate-winners-need-another-prize-8678?utm_medium=email&utm_campaign=Latest+from+The+Conversation+for+7+August+2012&utm_content=Latest+from+The+Conversation+for+7+August+2012+CID_4b31ca06c5e0ad3cdefcb84b1375580c&utm_source=campaign_monitor&utm_term=University+subsidies+do+graduate+winners+need+another+prize