In a new report from the Higher Education Policy Institute, After demand driven funding in Australia: Competing models for distributing student places to universities, courses and students (HEPI Report 128), Professor Andrew Norton warns against controlling student numbers when the population of young people is rising.
The number of school leavers in the UK, which has been falling for years, will soon start rising again and Australia’s 18-year old population will increase rapidly from the mid-2020s.
The ‘demand driven’ funding system in Australia, which was introduced a decade ago, removed limits on the number of bachelor-degree students in public universities. England followed suit by abolishing student number controls in 2015.
In both England and Australia, universities responded by recruiting more students. The policy achieved many of its objectives, although drop-out rates grew as universities enrolled students who might previously have been shut out.
In late 2017, cost concerns meant the Australian Government froze its bachelor-degree funding for two years. The number of student places is now likely to fall. In England too, there is growing interest in introducing new restrictions on student numbers.
The author of the report, Professor Andrew Norton of the Centre for Social Research and Methods at the Australian National University (ANU), warns that reducing the proportion of people who can find a university place hits under-represented groups hard:
Universities ration scarce student places by awarding them to applicants with the strongest past academic performance. In Australia and elsewhere, school students from disadvantaged backgrounds on average receive the lowest grades. So fewer university places inevitably mean more disadvantaged applicants miss out on university offers. The gains made under demand driven funding could easily be reversed.
The new report acknowledges that demand driven funding is not the only way to respond to demographic change. In the past, governments in Australia and England have used block grant systems to increase funding and student places. However, Professor Norton concludes block grant systems are less effective overall:
Block grant systems require activist ministers to push reform through government processes, while demand driven systems automatically respond to demographic and labour market changes. Block grant systems can create unlucky generations who miss out on university because policy cannot respond effectively to population growth. It has happened before in both Australia and England and it could well happen again in the 2020s.
Professor Norton argues that systems that respond to students are better at adjusting to changes in demand for universities and courses. Under Australia’s demand driven funding, three universities more than doubled their enrolments. Health-related courses increased enrolments more than any other, responding to strong student interest and labour market needs.
Nick Hillman, HEPI’s Director, said:
England is at an earlier point in the policy cycle than Australia. Policies discouraging extra student places remain a historical artefact for now and some university admissions offices still have their foot firmly on the gas.
But a close reading of recent political announcements suggests that student number controls could be on the way back, just as a demographic bulge starts approaching higher education. That could be a disaster for social mobility.
In an Afterword, Professor Alec Cameron, Vice-Chancellor of Aston University and previously Deputy Vice-Chancellor at the University of Western Australia, says:
In England, there are currently pressures from both sides of politics, which have elevated the likelihood that the current system may not survive in the medium term.
As the experience of Australia demonstrates, if governments wish to limit the cost of higher education to the public purse, the options are to either restrict numbers or to restrict funding per student. …
How much longer year-on-year reductions can be absorbed is an ongoing experiment. It would seem that any fat in the sector has been excised by now, with the ongoing cuts likely to impact on the quality of the system and compromise the student experience.
Notes for Editors
- The Higher Education Policy Institute was established in 2002 to help shape the higher education debate with evidence. It is the UK’s only independent think tank devoted to higher education. HEPI is a non-partisan charity funded by higher education institutions and other organisations that wish to see a vibrant policy debate.
- HEPI has previously suggested that there is a need for at least 300,000 extra full-time undergraduate places in England by 2030 – see here. Our earlier work on the removal of student number controls in England and Australia also remains available on our website.
- During the Covid-19 crisis, HEPI will be continuing to produce written reports and blogs (including on the crisis itself – see here and here) but our programme of events is on hold, in line with official advice.