Uni student quota system is unfair and inefficient

Although the unlucky ones don’t yet know who they are, more young Western Australians than normal seem likely to miss out on a place at university next year.  This will come as a nasty surprise to people used to the school system, where moving to the next level could be taken for granted, so long as minimum standards were met.

In higher education, unfortunately, things are quite different. While in the school system there are as many places as there are students willing and able to fill them, in the university system places are much more limited. The federal government gives each university a quota of places and, while they can take more, for those extra students they only earn about a quarter as much as they do for within quota students. This isn’t much of an incentive to take additional students.

One problem with quota systems is that they cannot deal with shifts in demand. In Western Australia applications for university are up. That would be a problem in itself but in addition, as this newspaper reported on Monday, the University of Western Australia is experiencing unusually low rates of drop out or deferment. Since UWA’s total number of places is limited, this means fewer first year students in 2002.

Even in the most flexible system, big increases will cause trouble. There are practical limits to how many more students universities can take on short notice. But the current system doesn’t allow short, medium or long-term adjustment. The number of places universities receive is largely the product of history, and current student demand has very little to do with it.
This system is unfair and inefficient. It is unfair because something as arbitrary as the year in which you were born can, seventeen or eighteen years later, mean that you miss out on a university place.  If you were a couple of years older or younger you would have been in a relatively low-demand year for university, and gained admission on the same marks.

It is inefficient because it wastes the talents of people who could have successfully completed a degree, and gone on to be a higher-skilled and more productive member of the workforce, to the benefit of themselves and the rest of the community.

The best solution to this problem is to abolish the quota system completely, and offer government subsidies and loans to anyone accepted by a recognised university or other higher education institution. The loan could be either for HECS, or for fees in a more deregulated system. A proposal along these lines did get to federal Cabinet in 1999, but as it was linked to a controversial idea to charge interest on loans it was rejected. The basic principle of extending university funding to everyone, however, is much more equitable than current arrangements.

In the current tight Budget situation the federal government may not be prepared to finance such an ambitious scheme, but there are some second-best partial remedies.

From 2002, the federal government is offering interest-free loans to fee-paying postgraduate students, to be paid back gradually once the student’s income level reaches a certain point. Both the Liberals and the ALP supported this scheme when it went through Parliament earlier this year. There seems no logical reason why it shouldn’t be extended to fee-paying Australian undergraduate students, which under an earlier Howard government policy can constitute up to 25% of students in any one course.

This isn’t ideal, because it means that for getting a few marks less you must pay thousands of dollars more, but it is better than the alternative of not going to university at all, or doing a course you don’t like.

Another second-best remedy is for the state government to fund some extra places. Admittedly they face budgetary constraints of their own, but this would not cost as much as it might first appear.

The federal government would still pay a subsidy of around $2,600, their standard payment for above-quota students, and there is no need to finance the research component that is part of the federal government’s grant to universities. By cost-cutting and cost-shifting university places could be created at less expense than keeping people at school.

The looming disappointment of some young Western Australians is just another example of the higher education system’s inability to cope with the demands put on it. There are, as I have pointed out, things that can be done about it. We have a new Education Minister in Canberra, Dr Brendan Nelson, and UWA Vice-Chancellor Professor Deryck Schreuder is about to take over as President of the Australian Vice-Chancellors’ Committee. Perhaps this is the time for new directions from the top.

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About the Author:
Andrew Norton is a Research Fellow at The Centre for Independent Studies and a former adviser to Dr David Kemp.