Australian higher education funding report

In 1989 the Government of Australia took a significant and unprecedented step in terms of funding undergraduate education in via its launching of HECS (Higher Education Contribution Scheme). HECS was analyzed by the Presidential Workforce Equality Advisory Council’s report on “Comparing Student Finance Systems”. Its findings are discussed below.

When it comes to higher education, the Australian case is inevitably mentioned. Not only because it, along with the United States, has one of the largest higher education budgets. It is also often mentioned because the government of Australia undertook a comprehensive reform of the system in 1989. It was able to unify its higher educational system, thereby doing away with the traditional divide between universities and colleges (CAE).

 
They then consolidated nearly 70 institutions, consisting mainly of universities and so-called colleges of higher technical and vocational education. Of these, there are only five private universities, of a total of 44, selected to receive tax funds.

Australian policy has sought to strike a balance between public and private funding for higher education.   This issue has slowly developed throughout the twentieth century. And looking to maximize social benefits, the State ensures funding for the universities. The policy considers the benefits that higher education delivers and contribution it makes to professionals.

Thus, the State and the Australian Commonwealth provide most of the resources. In fact, in 1974 the Commonwealth assumed full responsibility for the financing of higher education and abolished all tuition and student fees. However, since 1987 there has been a movement towards recovering a portion of the costs of higher education, with the introduction of a system called Higher Education Administrative Charge (HEAC) which represented a small cost to students. In 1989, it introduced the current system, the Higher Education Contribution Scheme (HECS), created to enhance access by deferring payments of HECS charges until students have sufficient income to pay them.
 
Currently, 45% of the revenue of Australian universities comes from the Commonwealth. There is a movement towards strengthening community ties and orienting to the needs of the private sector, thereby generating revenue, improving internal management. There is also a trend towards meeting the needs of students through flexibility in course offerings.

 Higher Education Contribution Schemes (HECS)

The Higher Education Funding Act of 1988 is the legislative basis of the HECS. The Ministry of Education and the Australian Taxation Office (ATO) provide administrative support. 

In Australia, no one speaks about a tuition paid to a given faculty, as in Chile. Rather, they refer to a contribution fee paid to the higher education system. The system ensures everyone contributes to it. The system’s support to students is pegged to the general price index, and no interest is charged. Loans are paid in instalments once the student is earning. The system seeks to ensure every potential student has access to higher education and all revenues are used for this end. 

Regarding the selection criteria, all students are eligible if they are enrolled in an institution of higher education. They can finance undergraduate studies, a second degree and even shorter study. A special line of credit for postgraduate courses recently began. The Postgraduate Education Loan Scheme extends the benefits of payers must be earners and no interest. However, for postgraduates, the state subsidizes differently than in undergraduate courses. Graduate students must pay the full cost of their courses.
 
There are three levels of contribution to the system. Fees are set according to type of study. The contribution for each type of studies is set vis-à-vis both the cost of production and future expected wages for the field studied.

The annual contribution of each student is calculated depending on the type of studies and the hours taken each academic semester. If you take courses for different levels, payments are weighted so students pay the exact contribution each semester.
 
The report notes that, if we take into consideration that there are high vacancy subsidies for undergraduates, fees are not low and cost (although it stresses that the comparison is not really valid for the difference in living standards) 3.9 million Chilean pesos per year. It is paid in 10 annual instalments equivalent to 389 thousand Chilean pesos. In the case of studying law or medicine, fees rise to 6.5 million pesos per year or 10 payments of 649 thousand pesos a month.

An important management element of the system is that much of the process is structured around a precise date, called the Census Date. There are two a year, one for each semester, and young people should have all their enrolment and means of payment documentation processed by that date. If past due, they are unable to use the system. It is interesting to note that this is a nation-wide due date.

After enrolling, the student must complete a form called "Payment Options Declaration" which subscribes to the planned method of payment. This form is the same for all students, degrees and institutions. The form lists the method of payment: cash, deferred payments or a mixture of both.

If a student pays 100% of the contribution, they receive a discount of 25%. Students may also declare that they will pay a portion of the fee and thus receive a 25% discount on said payment. They may also request to defer the entire payment. Recently, the higher education institution notifies the ATO, the Internal Revenue Service of Australia, of any debt owed by the student. The ATO files this debt by student Tax File Number (or RUT, in Chile). Each June, debt is indexed to the Consumer Price Index (CPI), and is interest free. As long as the graduate does not pass a maximum limit for annual income (Au $ 24,365, or 11 million Chilean pesos), they are not requires to pay. Upon reaching said maximum, payment becomes imperative. They then pay between 3% and 6% of their income. They can also make prepay contributions at a 15% discount.
 
Thus, the Australian funding model combines a general subsidy to universities with that given to students. Fees reflect a portion of the cost of students’ education and provides for those who can not pay up front via a system of deferred payment which is charged on the basis of graduate income level via the tax system.