Better university funding arrangements

On 19 June 2020, the Hon Dan Tehan MP, Minister for Education, announced the Job-ready Graduates Package. The package focuses the public investment in higher education on national priorities and ensures the system delivers for students, industry and the community.

Importantly, the package aims to deliver more Job-ready graduates in the disciplines and regions where they are needed most and help drive the nation’s economic recovery from the COVID-19 pandemic.

The package will provide for better arrangements of for university funding with targeted investment in areas of national priority, more opportunities for regional, rural and remote students, a better integrated tertiary system as well as improved transparency and accountability for the higher education sector. 

Reducing complexity and targeting job ready graduates

As part of the Job-ready Graduates Package of reforms to higher education, and subject to the passage of legislation, the Australian Government will redesign the Commonwealth Grant Scheme (CGS) funding clusters and student contribution bands for students in Commonwealth supported places (CSPs). This means that the amount of money the Government provides universities (the Commonwealth contribution) for different courses will change, and the amount students pay to study (usually deferred through a HECS-HELP loan – the student contribution) will also change.

This reform will ensure total funding per student place is in line with contemporary evidence on the cost of delivering university education. This is important, as under the current system some courses are “over-funded”, and some are “under-funded”, leading to incentives for universities to offer some courses over others based on funding arrangements rather than in response to demand from students and the labour market.

These changes will better align Commonwealth funding to emerging labour market priority areas, including nursing, health occupations, teaching and IT. In addition, universities will be given additional freedom through a funding envelope, which will be indexed in line with CPI to maintain its real value, to ensure they are able to respond to industry and student demand for different courses.

Under the changes, around 60 per cent of students (based on current enrolments) will benefit from a reduction in student contributions or would see no change to student contributions. Australia’s world-leading HECS-HELP loans system will continue to ensure that eligible students face no cost barriers to gaining a higher education.

What does this policy mean for students?

Students studying courses in key growth areas will see significant reductions in their student contributions, including by around one fifth for science, engineering, health, and architecture, almost one half for education and nursing, and over one half for mathematics.  

Commencing students studying units in arts, society and culture, law and economics, creative arts and communications will see increases in student contributions for those units. However, continuing students will contribute the same amounts for these units as they would have done before this policy was implemented.

These new student contribution amounts will also apply to education and nursing students who had their contributions grandfathered from 2010, effectively ending these grandfathering arrangements. These reductions in student contributions recognise the significant public benefits associated with these fields of study.

Under this package, students will also benefit from more funding flexibility through the funding envelope measure, which will allow universities to offer CSPs at the level students are demanding them.

For more information on this measure see our frequently asked questions.

Introducing a funding envelope 

Subject to the passage of legislation, the introduction of a funding envelope will mean that funding to Table A universities will no longer be earmarked for postgraduate or undergraduate students. This will provide greater flexibility for universities to respond to the needs of students and employers.  

Universities will be able to transfer places within their funding envelope on a cost neutral basis between disciplines (excluding medical) and course levels (sub-bachelor, bachelor and postgraduate). Universities will also be able to trade places with other universities on a cost neutral basis. Universities will not be allowed to transfer their allocated CSPs to enabling courses.

The funding envelope will commence from 1 January 2021, with the amount indexed by CPI each year.

For more information on this measure see our frequently asked questions

Targeting growth to needs

Under the Job Ready Graduate package, and subject to passage of legislation, the Australian Government will fund more bachelor‑level Commonwealth supported places (CSPs) at universities from 2021.  

Universities will be allocated additional Commonwealth Grant Scheme (CGS) funding for each funding agreement period, beginning in 2021. The funding will be a percentage increase on non‑medical bachelor (non-designated) funding, based on the proportion of students at campuses in regional, high-growth metropolitan and low-growth metropolitan areas. Funding will increase by:

  • 3.5 per cent a year for regional campuses
  • 2.5 per cent a year for campuses located in high-growth metropolitan areas 
  • 1 per cent per year for campuses located in low-growth metropolitan areas.

The additional growth in places allows universities in regional and high-growth metropolitan areas to respond to the needs of their communities. It also responds to the findings of the National Regional, Rural and Remote Tertiary Education Strategy (Napthine Review) to increase the tertiary education opportunities for people in regional and remote areas. Higher education attainment rates are lower in regional areas than should be the case and this measure reflects the Government’s ambition to reduce this disparity.

Universities will not need to apply for this funding. It will be calculated based on the most recent available student load data, and the most recent projections for population growth across statistical area level four (SA4) areas as published by the Australian Institute of Health and Welfare.

What does this policy mean for students?

This funding will ensure more university places are available to prospective students in regional and high-population-growth areas of major cities. In particular, it provides substantial growth in funding for regional university campuses, with the intention that the participation and attainment rates of regional students will increase relative to metropolitan Australia.

For more information on this measure see our frequently asked questions

More transparent and accountable funding 

The Australian Government will give universities greater flexibility while increasing transparency and accessibility in funding arrangements. This will be achieved by the introduction of a National Priorities and Industry Linkage Fund (NPILF) and an Indigenous, Regional and Low SES Attainment Fund (IRLSAF) from 2021.

The NPILF will encourage universities to engage with industry to design and deliver vocationally oriented teaching that equip students with the skills they need to thrive in today’s workforce. To support more industry-linked teaching, the Government will make work experience in industry (WEI) units eligible for CGS funding.

The IRLSAF will fund universities to support Indigenous students, as well as those from low SES and regional backgrounds, by combining the Higher Education Participation and Partnerships Program (HEPPP), regional loading, enabling loading, and relevant elements of the National Institutes Grant. Funding for these programs will be distributed in accordance with current policy until 2023, with the Government working with the higher education sector during this time to design a more refined model to support equity outcomes.

This reform package has been carefully designed to ensure that universities can maintain their revenue over the first three years of implementation. A $705 million transition fund will be established and distributed to universities in such a way that ensures fairness across the sector.

For more information on this measure see our frequently asked questions.

Also available is the technical note for the Job-ready Graduates package.

Last modified on [220|1873]