Home | Policy & Reform | ATEC to administer caps on domestic students with course subsidies, HECS loans
Education Minister Jason Clare has announced a plan to manage how much a university can grow its student cohort that rely on federal government financial support. Picture: NCA NewsWire/Martin Ollman

ATEC to administer caps on domestic students with course subsidies, HECS loans

Labor will cap the number of domestic students who rely on Commonwealth financial support in the nation’s universities, in a significant shake up of the higher education sector just a month after the Albanese government moved to limit booming foreign enrolments.

In a policy consultation paper released on Friday, Education Minister Jason Clare proposed a “hard cap” on the number of ­students who get a course subsidy and a HECS-HELP loan at each university.

Under Mr Clare’s plan, each university will be given a student limit by a new statutory body, the Australian Tertiary Education Commission, which will be in charge of higher education.

Mr Clare said changing the funding system was part of his big plan, outlined in his Universities Accord report, to expand tertiary education so that 80 per cent of working Australians have a TAFE or university qualification by 2050.

The new system, to be called “managed growth funding” would replace the current ­arrangement for subsidising ­university courses in which each university is given a funding limit but is free to enrol as many unfunded students as they want to.

Many universities are believed to have gone over the funding limit and these will be given time to reduce their numbers.

Mr Clare’s move is yet another step in winding back the free-for-all “demand-driven” university funding system introduced by the Rudd and Gillard Labor gov­ernments over a decade ago that allowed unlimited funding for university students and guaranteed that any student accepted for university study would get a subsidised course.

First, in 2017, the Turnbull government announced that the funding level to each university would be capped.

However, universities were still allowed to enrol students above the funding level, as long as there was no government ­subsidy.

Under Mr Clare’s new plan, the government will directly control student numbers, except for First Nations students whom the ­government wants to encourage to go to university.

First Nations students will sit outside the student cap and will get government funding if they are qualified to enrol in a university course.

The government will also make special arrangements for other disadvantaged students, such as those from regional areas and low socio-economic backgrounds.

These students will be guaranteed a university place if they are qualified, but possibly not at their university of choice.

Under the planned capped system, there will be no limit on student numbers in courses where students pay full fees, such as several master degrees and other postgraduate qualifi­cations.

In the policy paper, the government argues that its proposed capped system will be more ­flexible and responsive to economic needs than the current ­arrangement in which each ­university’s allocation of funding for course-subsidy courses is ­governed by a rigid and somewhat arbitrary formula.

“Rather than determining growth through these fixed rates, which have been shown to not reflect student demand, the new system will more responsively ­allocate growth to align with student demand,” the government paper says.

The new capped system will depend on the government ­passing legislation to change ­university funding arrangements and also to set up the new ­Australian Tertiary Education Commission.

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