How Budget 2014 Makes University Study Far More Expensive

Changes in the 2014 budget mean that HELP repayments will be bigger and kick in sooner — and studying for a PhD could now cost as much as $30,000. Emmaline Bexley from the University of Melbourne explains how the changes will hit students — and potentially discourage research.

Student picture from Shutterstock

The announcement in last week’s Federal budget that fees will apply to postgraduate research for the first time has so far flown under the radar. But the effects will be significant. Coupled with the effect of compound interest on undergraduate fees while a postgraduate is studying, a PhD could cost upwards of $30,000.

Under the budget changes to higher education fees have been extended to research Masters and PhDs. Until now, the vast majority of these researchers did not pay fees, in recognition of the central role they play in growing Australia’s capacity in research and innovation across the disciplines.

Postgraduate study is integral to research

Postgraduate researchers undertake much of the day-to-day research conducted in our universities. Because the PhD often provides the opportunity to pursue self-directed research, research at this level is an important source of new and unexpected discovery. And, of course, when these students graduate they become the research workforce on which Australia depends for further discoveries, innovations and applications of ideas.

It is important that potential PhDs and Masters by research students are not dissuaded from undertaking study at this level by the regressive nature of the proposed changes to higher education fee arrangements. The 2008 House of Representatives Standing Committee inquiry, Building Australia’s Research Capacity, raised concerns that postgraduate research already faced strong competition from the workforce due to the wages forgone while postgraduates studied.

Researchers won’t be able to afford the research

From 2016, postgraduate research places will be subject to HECS fees of between $1700 and $3900 per year. As with the deregulation of undergraduate fees, this is an about-face in the way the public benefit of higher education — in this case the highest form of education — is valued and funded.

Last week’s budget also introduced real interest on HECS debts from 2016 — for both new HECS debts and for current graduates who still carry a HECS debt.

Many questions have arisen about the introduction of real interest on HECS: is it fair to apply it to graduates who entered into HECS arrangements with no knowledge that interest would be introduced after the fact? Is it reasonable that the new lowest repayment rate (2%) is below the interest rate, so that even graduates making repayments through the tax system will be falling behind as cumulative interest grows their debt?

A question vital to the future of Australian research and innovation has been missed. How will the changes to undergraduate higher education fees affect participation in postgraduate research education?

The majority of postgraduate researchers will have an undergraduate HECS debt. Taking four years out of the workforce to do a PhD will mean that debt will quietly accumulate compound interest as research candidates study (it is presently adjusted each year for CPI only).

On an undergraduate debt of, say, $60,000 — which may be modest as the majority of postgraduate researchers are at Group of Eight institutions, and these institutions are likely to have the highest undergraduate fees — a four-year PhD would cost an additional $10,000 in interest on the undergraduate debt alone. And that’s at today’s 10-year bond rate — the rate to which interest on HECS is pegged. If the bond rate rose to or above 6 per cent, at which the new interest rate on HECS is capped, accumulated interest would be more than $15,000 over four years.

Add to this the $7000 to $16,000 that getting a PhD will cost in fees, and our brightest students will need to think very carefully about whether a PhD is really worth it.

People with higher degree qualifications go into a variety of areas of employment, but the PhD is no guarantee of high income. Indeed, if the graduate pursues a career in academia they will be likely to undertake further, postdoctoral research work, at a pay rate that is unlikely to be far above the median wage.

Further, research undertaken by the Centre for the Study of Higher Education in 2011 showed very high levels of job insecurity among early career academics, particularly in research-only roles.

Our brightest students will need to ask themselves if an extra $30,000 for a PhD is a bridge too far.The Conversation

Emmaline Bexley is a Lecturer in Higher Education at University of Melbourne. She does not work for, consult to, own shares in or receive funding from any company or organisation that would benefit from this article, and has no relevant affiliations.

This article was originally published on The Conversation. Read the original article.

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