Australian Bureau of Statistics
4102.0 - Australian Social Trends, 2004
Previous ISSUE Released at 11:30 AM (CANBERRA TIME) 15/06/2004
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Expenditure: Paying for University Education
SELECTED SOURCES OF HIGHER EDUCATION FUNDING
SOURCES OF HIGHER EDUCATION FUNDING
In 2002, the total operating revenue for Australian higher education institutions was $11.6 billion, an increase from $8.2 billion in 1997. In 2002, the three largest sources of higher education funding were Australian Government contributions ($4.7 billion), fees and charges ($2.5 billion), and HECS($1.8 billion).
Funding provided by the Australian Government to higher education increased from $4.4 billion in 1997 to $4.7 billion in 2002. As a proportion of overall funding, this represented a decrease from 54% in 1997 to 40% in 2002.
The contribution of student fees and charges (other than HECS) to higher education funding more than doubled between 1997 and 2002, from $1.2 billion to $2.5 billion. This represented an increase in the proportion of overall funding from 15% in 1997 to 21% in 2002. This increase coincided with a large increase in the total number of overseas students (from 63,000 in 1997 to 185,000 in 2002) as well as the introduction of full-fee-paying places for domestic undergraduate students in 1998.
In 2002, $1.8 billion was raised through HECS, representing 16% of all higher education funding. This compares with 15% raised through HECS in 1997.
STUDENTS AND HECS
Since the introduction of HECS in 1989, the majority of higher education students have entered university with a commitment to make a substantial contribution to the cost of their education via HECS. In 1989, around 372,000 students were HECS-liable, increasing to 420,000 in 2002. There was a decrease over this period in the proportion of students who were HECS-liable, from 86% to 67%. The decrease in the proportion of HECS-liable students reflects increasing numbers of overseas students and domestic fee-paying students since the late 1990s - both of these groups are largely HECS-exempt.
Since the introduction of HECS, the amount charged and the rate of repayment through the tax system have varied. In 1989, all students were charged a flat rate irrespective of their course of study. In 1997, a three-tiered system of charges was introduced to reflect the differing cost structure of various courses and the differing potential earning capacity of graduates.(SEE ENDNOTE 4)
HECS-liable students have the option of paying their HECS fees up-front to obtain a discount (25% in 2004), or delaying payments until they have attained a certain level of income. At this time, a proportion of an individual's salary is paid towards their HECS debt through the tax system. Of the 420,000 HECS-liable students in 2002, 79% deferred their payment while 21% paid up-front with a discount. Each year, the Australian Government contributes the difference between repayments received and the total HECS payments required to be made to the sector. In 2002, 17% of funding provided by HECS came from students' HECS contributions. The remaining 83% was paid by the government through loans to students deferring their payments, ultimately paid back through the tax system.
From the introduction of the scheme in 1989, through to June 2003, over 1.7 million students have taken out HECS loans totalling around $13 billion. Of these, more than 600,000 have repaid their loans in full.(SEE ENDNOTE 5) During this period, Australia's accumulated HECS debt has increased steadily to more than $9 billion in 2003, and is estimated to reach $12 billion by 2006.
AUSTRALIA'S ACCUMULATED HECS DEBT(a)
In 2003, the average amount owing on individual HECS loans was $8,500 overall. However, there was some variation across the states and territories with the average HECS debt ranging from $6,900 in the Northern Territory to $9,000 in Australian Capital Territory.(SEE ENDNOTE 5) Of the 1.2 million people with a HECS loan in 2003, around two-thirds owed $10,000 and or less, while 6% owed more than $20,000.(SEE ENDNOTE 5)
Over the decade to 2002, the number of HECS-exempt students almost doubled from 104,000 in 1992 to 206,000 in 2002. The increase in the number of HECS-exempt students over the decade to 2002 may be largely due to the increase in the number of overseas fee-paying students (5% of all students in 1992 compared with 20% in 2002). The majority of overseas students are full-fee-paying or are recipients of aid scholarships. In 2002, the majority (61%) of HECS-exempt students were overseas fee-paying students, more than twice the proportion of overseas fee-paying students in the HECS-exempt category in 1992 (26%).
As well as the increase in the number of overseas students over the decade to 2002, there was also an increase in the number of domestic fee-paying students. In 1992, only 2% of all students were domestic fee-paying students. This increased to 5% (or 30,000 students) in 2002. Full-fee-paying places for undergraduate courses were introduced in 1998. In 2002, 22% of domestic fee-paying students were undergraduates, increasing from 4% in 1998.
1 Department of Education, Science and Training 2001, The National Report on Higher Education in Australia, DEST, Canberra.
2 Department of Education, Science and Training 2004, HECS, loans and fees manual, 2004, DEST, Canberra.
3 Department of Education, Science and Training 2002, DEST Annual Report 2001-2002, DEST, Canberra.
4 Department of Education, Science and Training 2003, Higher Education Report for the 2003 to 2005 Triennium, DEST, Canberra.
5 Australian Taxation Office 2003.
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