Enrolments fall over degrees of debt

The rising cost of higher education might be the reason an increasing number of students appear to be opting out of pursuing a university degree.

The most recent data from the Commonwealth Department of Education shows the number of new domestic undergraduate students in Australian universities in 2022 was the lowest since 2013.

The 2022 figure fell 8 per cent compared to the previous year and was 3 per cent lower than pre-pandemic enrolment levels.

Enrolments declined across all major fields of study throughout 2022, encompassing critical areas that today are dealing with workforce shortages such as engineering, information technology and teaching.

The decline also encompassed fields burdened with tuition fee increases because of the federal government’s Job-ready Graduates reforms. Affected fields included management, the humanities, and creative arts.

Research by the University of Melbourne’s Melbourne Institute has shed light on why fewer Australians are pursuing higher education.

Researchers asked study participants why they believed people of a similar background to themselves – in their 20s and 30s – might not pursue a university education.

Survey participants were given the option to select multiple responses from a pool of 16 reasons, which could be categorised into three broad groups: financial barriers (high tuition costs and insufficient financial aid); personal barriers (lack of interest in attending university and health-related issues); and social barriers (difficulty assimilating into the university community).

Of the survey participants, 60 per cent cited expensive tuition fees as a barrier to enrolling in a university course.

Fifty-two per cent of respondents also expressed concerns that obtaining a university degree might not necessarily result in improved job prospects, while a similar percentage indicated a hesitance to incur student loan debt.

In addition, 45 per cent identified the cost of living as a barrier to pursuing higher education, while 41 per cent of survey participants pointed to insufficient financial support as a deterrent.

The decline in enrolments might thwart ambitions announced by Education Minister Jason Clare last year to double the number of university students by 2050.

With the cost of obtaining a university degree at the forefront of students’ decision making, it is essential to understand the financial landscape of higher education in Australia.

In 2023, the typical cost of obtaining a bachelor’s degree ranged between $20,000 and $45,000.

The majority of Australian undergraduate students do not bear the immediate burden of these expenses.

Instead, they opt for a HECS-HELP loan provided by the government to finance their educational pursuits. This loan only requires repayment once graduates reach a specific income threshold.

Although HECS remains interest free, it undergoes an annual adjustment on June 1 every year to account for the rising cost of living. As a result, HECS gradually increases until it is fully repaid.

In 2021, during a period of low inflation, indexation for HECS debts was just 0.6 per cent.

However, in 2023, amid rising inflation rates, HECS underwent a more substantial indexing of 7.1 per cent.

While that might alarm those already concerned with the cost of higher education, the current high index rate for HECS is expected to be temporary, with historical data suggesting inflation will decrease over time.

Besides, financial experts commonly categorise HECS as ‘good debt’ because it lacks a fixedpayback deadline and repayments only rise in conjunction with the graduate’s income.

Despite the challenges posed by the rising cost of higher education, a university degree continues to hold immense value.

Obtaining a degree opens doors to a world of opportunities, personal growth and the development of critical skills that can lead to fulfilling careers.

It equips individuals with the knowledge and expertise needed to contribute to society, make informed decisions and adapt to an ever-changing jobs market.

The long-term benefits of a university degree, both in terms of career prospects and personal enrichment, remain a compelling reason to pursue higher education.

But, as students weigh the costs and benefits of pursuing a university education, understanding the financial intricacies is crucial to making informed decisions about their educational journey.

• Professor Gary Martin is chief executive of the Australian Institute of Management WA