Presented by Professor Warren Bebbington, Vice-Chancellor and President, University of Adelaide
In the vast Minnesota cornfields of the American Upper Midwest , sits the little township of Northfield. Northfield’s tiny population are traditionally wheat, corn or dairy farmers; but their number is greatly swollen each year by those who come for one of the two undergraduate colleges nearby. “Cows, Colleges and Contentment” is the town’s motto. The more prominent of the colleges is on the northern edge of town, Carleton College.
In Australia, we worry that regional universities would struggle to attract students or be financially viable in a deregulated environment, and even metropolitan universities depend on their local catchment area for most students. But this year Carleton’s applicants were five times the number of places it had available, and they came from every American state and 37 countries abroad. This despite the fact that, just 60 km away in Minneapolis-St.Paul sits the University of Minnesota, one of the Top 100 universities in the world, whose fees are lower than Carleton’s.
Unquestionably, Carleton offers undergraduate education of a quality Australians can only dream of. In Australian universities, dropout rates of 15% or more are common, but Carleton’s retention rate is 97%, and 91% of its students finish their degree in the minimum time. In Australia’s public universities, staff-student ratios have declined to around 1:21, and first-year lectures of 500, 800, or 1,000 students are not uncommon. At Carleton the staff-student ratio is 1:9, and 65% of its classes have fewer than 20 students. Indeed, large lecture courses are unknown: no class is larger than 49.
There are three semesters a year, and a co-curricular program involving 90% of students, from community service projects to off-campus study programs ranging across more than 60 countries: in Australia we would be pleased if such programs reached 10%. There is a rich extracurricular life, with over 190 social and sporting clubs—this for a student population of just 2,000, a menu of extracurricular activities that would shame an Australian university of 40,000.
And what of Carleton’s graduate outcomes? 80% of its students are successfully admitted to graduate schools elsewhere, it has produced 18 Rhodes Scholars, and its success with National Science Foundation Fellowships is second in the nation. Unlike in Australia, Carleton does not find a rural setting a weakness: it wears it as a badge of honour, building traditions around it. Small wonder that among the 1,800 four-year colleges in the US, Carleton is ranked in the top ten, at No. 7.
But Carleton is not unique. It is part of the spectacular range of choice in higher education in the USA, which includes two-year community colleges, four-year undergraduate colleges, comprehensive regional universities, and world-famous research-intensive universities; large and small, residential and non-residential, public and private. Research-intensive universities—the dominant type in Australia—are in fact the smallest group in the US: indeed, barely 5% of all colleges and universities in the US are research intensive. It is the four-year, teaching-focused undergraduate colleges that are the most numerous,, from Pomona College in California to Amherst in Massachusetts making up a quarter of its higher education institutions.
The colleges are not just superior in most quality measures to Australia’s undergraduate programs; they offer a feast of learning aims.
Some embrace an educational philosophy—liberal arts at Carleton; science, maths and engineering at Harvey Mudd, Claremont CA; visual arts and music at Oberlin, Ohio; or business at Drew in New York, with its intensive placements on Wall Street. Some focus on the employment needs of their region—agriculture, technology, marine study, even golf course administration. Some feature ethical or political values: Grinnell in Iowa is known for its social activism, delivering many graduates into the Peace Corps, while Spelman in Atlanta focuses on problems of local poverty, placing its students as mentors in urban housing projects; St Olaf in Minnesota serves a mainly Lutheran community and focuses on the ethics and culture of Lutheran life. Some specialise in taking less well-prepared students, with a “B average” on admission; some teach women-only—Smith, Scripps, Barnard or Wellesley; a proud group seek to raise the aspiration of the Black or Hispanic minorities, like Bennett NC or Knoxville, Tennessee; while tribal colleges have missions to celebrate the culture of the American indigenous peoples, like Little Big Horn, Montana, or Diné, Arizona. Indubitably, the characteristics of higher learning in the US are freedom and choice.
Meanwhile, in Australia the public university landscape is monochrome by comparison, having been shackled to regulatory uniformity for two generations. In the Dawkins reforms 30 years ago, many teachers colleges, technical institutes, agricultural colleges and art schools of individual character and purpose, often of long standing, were merged with universities and required to adopt a homogenous research mission. Whether this was wise was endlessly debated at the time, but it is something that has scarcely changed since. US students typically leave their home town to “go to college”, having selected a style of college of their choice; Australians seldom leave theirs, for essentially the types of institution available in one city differ little from those in another.
A stultifying sameness descended on the sector, with centralised government regulation of degree types, student numbers, and many other matters. Professors in the US, though they are encouraged to be research-active, say teaching is their primary love. But in Australia research was not merely encouraged but became required: research became mandatory for an academic’s appointment, tenure and promotion, in a culture where any focus on teaching was seen as a dilution of the narrowly-regulated mission.
Fees charged were also centrally fixed, while the formula for Commonwealth subsidy was eccentric and not often fully adjusted for inflation. Thus as their costs rose, the universities slowly starved. Finally in 2012 caps on student numbers were lifted, but without fee flexibility to keep pace with their costs many universities had no choice but to endlessly expand enrolments, making impersonal, massed classes a commonplace, and worsening the dropout rates as increasingly ill-prepared students were accepted. If American higher education offers learning freedom and choice, Australia has long had learning in chains, manacled to a single university definition as it was slowly garroted by the tightening of the fiscal screw.
In the current debate on university reform, “Americanization” has been used as a pejorative term. Yet by any measure, the American university system is preeminent in the world. It has the lion’s share of the world’s finest universities and Nobel prize-winning scholars, it is the destination of choice for international students the world over, and it has the models to which other nations adapt. Why shouldn’t Australia try and learn from it too?
If only closed minds came with closed mouths. We hear it said in the media that American college fees cost a fortune. But the majority of Americans attend public universities, fees in 2012 averaged $8,240 pea, or community colleges were fees averaged $2,960p.a.[i]
To be sure, some of the better private universities in the US advertise prices of more than $40,000 p.a. for tuition. At Carleton it is $46,167 tuition plus board. But in a free market, there is price competition, and in the US no-one much pays the “sticker price,” as it is called. At Carleton there is a needs-blind admission policy: the College meets 100% of the needs of all admitted students, as demonstrated in a family financial assessment. 53% of the students receive scholarships or financial aid, which averages at $31,000 and Carleton College is top in the US for winning National Merit Scholarships. In addition 80% of the students are given paying jobs on campus. In other words, even at this highly selective and remarkably successful college, most students leave with little more than the typical Australian HECS debt.
We are told that American graduates are desperate slaves to massive college debts. But two-thirds of US students receive scholarships, tuition discounts or financial aid, and less than 7% leave with a debt of more than $50,000. Many leave university with debts under $10,000; in 2012 the average college graduate debt was $28,000, not far from current Australian levels.[ii] In fact the real problem in the US is with dropouts, those who leave before they graduate and thus must take lower-paid jobs in which they struggle to afford repayment of their debts: it is they who suffer hardship and default on their loans in large numbers. Could this happen in Australia? Not likely, thanks to the HECS income threshold principle, the salary of over $50,000 below which no-one pays anything back, this problem is deftly side-stepped here.
Asking students to shoulder a significant share of the cost of their education is not an exclusively American phenomenon: there are at least seven advanced countries that have shifted a greater share of costs to students in recent years, from the UK to Germany, Canada to South Korea.
Nonetheless, the proposed imposition on Australian student debt of interest at the bond rate from the commencement of their studies would breach another basic principle of HECS—and an internationally admired one— that a student’s debt should not rise in real terms while they are below the income threshold at which repayment begins. This Budget proposal would discriminate against those who choose lower-paying work and take longer to reach the threshold, or against those who leave the workforce for a period to raise children. It would mean many were unable to repay the debt even across their whole working life. Such an interest and repayment policy could considerably distort the reform outcomes: truly, it would undermine the fairness of HECS and absolutely must be rethought before it becomes law.
Actually, the largest difference between US and Australian university incomes is not in the student fees they collect but the in the grants for research from government and industry they win, and in the gifts and endowment interest they receive. At Carleton, philanthropy plays a major role: its original lands were gifts, as was the foundation bequest from businessman William Carleton, and with the sustained support it receives from grateful alumni its endowment is nearly $700 million. It is hard to imagine a first-rate undergraduate college of this kind in Australia without a founding benefactor, but despite recent magnificent gifts to our universities, Australia is only beginning its adventure in philanthropy. We now have 39 billionaires in Australia, but little of the transformational philanthropic giving to universities evident in the US. Giving to our universities is increasing; but we have yet to have our Leland Stanford or Ezra Cornell step forward, founding benefactors of Stanford and Cornell. Indeed, it may be 20 years before philanthropy reaches the levels we need to take full advantage of the reforms now before us.
In the public debate, deregulation has become confused with the budget cuts and the increased fees which are their consequence. To be sure, the Commonwealth cuts are very substantial: at the core a 20% cut in the per-student subsidy, and overall some $1.9 billion over the next three years. I had not taken the Liberals to be admirers of the finances of the former Soviet states, so at a time when Australia’s record for public spending on tertiary education is less than Estonia’s and about equal with the Slovakia,[iii] the cuts are indeed grim news.
Undoubtedly, cuts would have been inevitable whichever government was in power: the $1.9 billion of the Liberal budget of 2014 remains less than the $2.3 billion “efficiency dividend” of the previous Labor government. Deregulation is the means by which universities will deal with the cuts. It is now supported by most of the university peak bodies, and disallowing it while there are drastic cuts in the budget would be a disaster: it would accelerate the current slow starvation of our universities would result in a dire, fiscal famine.
The debate has given scarcely any attention to the kind of new institutions that might emerge from the reforms—innovative-online delivery or teaching-focused undergraduate colleges, institutions with specialist missions to serve a particular need, or those specializing in the transition to university for those not well prepared. We might again see proud, single-purpose arts schools or industry-relevant vocational colleges. The institutions that will thrive in the deregulated environment are those who offer real value and meet demand, and these may well be new ones. Indeed in many of the countries which have recently made dramatic shifts in higher education policy, it has not been the existing universities that become more responsive to student needs, but new institutions which evolve—the new polytechnics in Austria for example.[iv]
The debate fears for our regional universities, and indeed we have some good examples of regional-focus amongst our institutions that needs to be preserved. But we have no universities who have defined themselves as predominantly—exclusively— facing their local communities, the way some Land Grant universities have in the US. We have no universities who have chosen to eschew research and focus primarily on first-class undergraduate education. We have none that require the residential education experience of the US colleges. In short, we have not escaped the shackles of regulation, and thus we offer students little of the sheer variety of choice of the US.
The debate has also ignored the budget announcement of an important new consumer advice tool to help students choose between institutions. In a deregulated environment the public will need to make reliable comparisons based on data independent of the universities themselves. And the budget reforms announced that the government will provide QILT (Quality Index for Learning and Teaching), a web-based resource of robust data on career outcomes and university experience, to be launched in August next year. Existing tools like the Good Universities Guide have been less about choosing which kind of university a student wishes to attend than about comparing amenities and a set of generic qualities. In the US students rely on the US News and World Report Best College guide, which uses measures far more appropriate than these to rank programs. Tables are provided of acceptance rates, class sizes, student: staff ratios, financial aid availability and graduation rates. We will need an Australian equivalent of the US News and World Report Best College guide meanwhile QILT will help to reset consumer advice to a deregulated landscape.
Some statements from incoming Senators in recent days can only have alarmed those in universities. There are those who would oppose deregulation, leaving universities without the flexibility they need to address their present stretched finances let alone cope with the coming cuts.
There are some who would push the legislation off to committees, and prolong the debate into early 2015: an act that would do significant damage to all universities, who are obligated to announce their 2016 fees a year ahead. What we need is for the deregulation legislation to be settled swiftly, so the present uncertainty can be swept away.
There are some political figures dwelling on projections about the consequences of the cuts for student fees. These have been speculative, and in some cases based on wrong assumptions. In SA the government has deplored how University of Adelaide medical students will now have debts of $80,000—this before my university has even begun to discuss its future medical fees, let alone announce them. No university has yet declared its 2016 fees, and no Vice Chancellor wants to see students burdened unnecessarily, for soaring fees would threaten to fracture the good will that has traditionally existed between universities and their communities.
The fact is that, for a university wishing to make up the cuts in Commonwealth subsidy with increased student contributions, the current average HECS debt for students taking a three-year degree, now about $23,000, may need to rise to about $33,000 for an entire degree. This is a far cry from the alarmist stories of vast fees suggested by some. The threat to our universities is also from mounting costs, not just from cuts to government funding, and most Vice Chancellors will be focusing on this too in preparation for 2016. Universities will want to seek productivity improvements, through reducing our costs and increasing our output of graduates—by improving completion rates or shortening the time-to-degree. To reiterate: deregulation should not be confused with cuts. Deregulation could have happened without cuts, and if the Senate is not careful cuts may now happen without deregulation.
The Pyne reforms seek to let learning loose. No longer would institutions need to stay with a single research-intensive definition, and abandon individuality in an attempt to scale the research ranking ladder, which despite all efforts stays remarkably unchanged over time. Instead, we will see gradually emerging a feast of imagination from university leaders about institutional differences and new college possibilities, and Australia’s philanthropists stepping forward to pair with educational visionaries, to create an array of new choices. None of this will happen quickly: a deregulated higher educational landscape will be the work of a generation. But it offers our universities the hope of positive developments ahead: participation is higher than ever and will improve even more, the opportunities for global reach are exceptional, the ways of improving teaching through new technology and innovative delivery are exciting, and the public’s thirst for new knowledge and discovery—to vanquish disease and pursue economic growth and prosperity—has never been greater.