International Students Pay for Australian Universities to Recruit More International Students
Public higher education in the U.S. has been steadily replacing government funding with tuition and fee increases to students for the past several years. College Affordability in Jeopardy, released in February 2003 by the National Center for Public Policy and Higher Education, shows that public colleges continue to become more expensive for students and families: "The states are responding to the budget crisis by passing major cuts on to colleges and universities-and colleges and universities are responding to these reductions by passing on the cost to students and families," said Patrick M. Callan, President of the National Center for Public Policy and Higher Education. "This is all happening at a time when student financial aid is not keeping pace with increases in tuition."
According to PURE, a project based in Finland focusing on educational funding, the private funding of higher education is dramatically increasing all over the world, a strategy supported by the World Bank. Private funding is another word, in this context, for tuition and fees. The increased financial burden which students are forced to bear to financed by a growing public credit market offering student loans.
More than 60 countries now offer some form of student loan program, with Australia's Higher Education Contributions System (HECS) considered among the most innovative. Introduced in 1989, HECS was the first large-scale Contingent Loan System in the world. This means, according to Jamil Salmi, an education sector manager for the World Bank, "that loan repayments are a fixed proportion of a graduate’s annual income. The administration of income-contingent loan systems is generally simpler and cheaper than with other systems, because loan repayment and recovery is handled through existing collection mechanisms (e.g., tax administration, the social security system). Income-contingent loans are also more equitable, since graduates’ payments are in direct proportion to their income."
HECS and higher education funding in Australia is in the spotlight today based on the Treasurer's Speech on the upcoming federal budget. Special forces were the big winners in the proposed Budget with $157 million being set aside to build a Special Operations Command to combat terrorism, while students were, in some ways, the big losers. They will face up to 30% increases, with only a higher contingent-income target to ease the pain; that is, as of 2005 students will not have to start repaying their loans until their income reaches $30,000 a year, (the current level is $24,365).
What is also striking in the higher education section of the newly unveiled budget is the treatment of international students. Over 200,000 foreign students (80% are Asian) study at Australian universities, generating $5B in export earnings. Well, they are about to be thanked for their contributions to the economy with extra charges totaling $113M, which will be used to promote Australian higher education abroad. The Straits Times reports that foreign students represent 18% of the total student population down under, but contribute more than 30% of some university budgets. Apparently the discrepancy is about to become even more pronounced.
How price sensitive is the demand for studying abroad? Will student fee increases, with an extra dose for international students, drive stay-at-home transnational ed programs? I would think so.