By Christopher Ziguras

So far, the discussion of national higher education funding reforms has focused exclusively on Australian students studying in Australian universities, and has largely ignored the flows of students across our borders. But there are issues for both students who come to study in Australia from abroad, of whom we have a higher proportion than almost any other country, and for Australian students who want to do a degree overseas. The extension of subsidies to Australian students enrolled at providers other than Australian universities will also have an important impact. I have opinions on both of these issues.

In the first part of this post I will consider the impact of undergraduate domestic fee deregulation on international students and in the second part, the impact of the extension of subsidies to Australian students enrolled at providers other than Australian universities.

 Undergraduate domestic fee deregulation

How will institutions price domestic and international students’ fees?

First, it is important to note that we’ve been through similar marketization before. Tuition fees were deregulated in 1985 for all international students, in 1994 for domestic students in postgraduate coursework programs, and for domestic students in Victorian vocational education in 2012. Non-university higher education providers can also set their own tuition fees for domestic undergraduates. For all of these categories of students, institutions compete on reputation, price and quality.

However, international fees are not as deregulated as you might think. The Higher Education Provider Guidelines require that providers must charge international students “as a minimum, a fee sufficient to recover the full cost of providing a course to an overseas student”. Providers can break even or make a surplus but not charge below cost for some programs and cross-subsidise from other programs or other income sources. Further, the government sets the minimum tuition fee that higher Australian education providers (public and private, universities and others) must charge onshore international students. These regulations also apply to offshore campuses and programs if students are able to study part of the program in Australia, which many of our offshore students would like to do. An institution is only exempt from these price controls where “a course is provided wholly off-shore and students will not at any stage enter Australia for study”.

If the government is proposing real fee deregulation then it should abolish such anachronistic price controls and allow institutions to determine the level of fees they charge to international students as well as to domestic students, onshore and offshore.

In practice, because domestic undergraduate fees have been constrained, institutions have taken advantage of their ability (and the governments’ expectation) to charge higher fees to international students, thereby cross subsidizing domestic students. In postgraduate coursework programs, providers have been free to set fee levels for domestic students but have usually charged international students higher fees.

The technical term for this practice of charging different prices for a good or service to different groups of customers is ‘price discrimination’. This is often uncontentious – we accept that adults pay higher prices than children at cinemas, for example. So far, there has been no outcry from international students about the higher fees they are charged for masters degrees, but the higher prices they are charged for public transport in some states has been a major bugbear for years. If undergraduate domestic fees are deregulated, this may well change.

If the government’s role is limited to providing subsidies for domestic students and fee-setting becomes the responsibility of providers, it is the educational institutions that will need to justify discriminatory pricing practices, which will become very evident as domestic fees become more transparent. Any decision to charge more to international students in order to cross-subsidise domestic students will be a decision that the provider will need to justify, and you can expect that the international student movement will be keen to make prospective students aware of extent to which providers’ fees are fair.

The extension of subsidies to Australian students enrolled at providers other than Australian universities

Why will subsidies for domestic students be restricted to Australian higher education providers?

The government has proposed to extend subsidies to Australian students that study at higher education providers other than universities, but only if they undertake degrees in Australia. If the government is committed to enhancing choice and international opportunities for students, as it claims to be, then it should also allow students to access a similar level of support for degrees undertaken overseas. Other countries, such as Norway and the Netherlands do this, and there are a range of models for managing the technical challenges involved in such programs. We benefit enormously from the support that other governments provide to their students who study in Australia, and it is time that we provided support to our students so that we can grow the current tiny number of Australians undertaking degrees abroad.

The government is proposing a protectionist policy framework, which treats local providers much more favourably that overseas providers. The result is that we will see more Australian students studying with non-university providers, but few able to undertake degrees abroad in the absence of equivalent support.

This anachronistic double standard applied to higher education providers is out of step with our approach to nearly every other industry and is not in the interest of students. In light of Australia’s ardent advocacy for trade liberalisation in education, and the huge benefits we have received as one of the world’s most successful education exporting nations, such protectionism smacks of hypocrisy.

Christopher Ziguras is Deputy Dean, International in RMIT’s School of Global, Urban and Social Studies. His research focuses on globalisation processes in education, particularly the regulation of cross-border provision. He oversees a wide range of international projects at RMIT and is a Board Member of the International Education Association of Australia. He received the RMIT University Vice-Chancellor’s Distinguished Teaching Award in 2011 and was Tony Adams Visiting Senior Scholar at the Centre for Higher Education Internationalisation at Universitá Cattolica Del Sacro Cuore, Milan, in 2013. His latest book  Governing Cross-Border Higher Education was recently published by Routledge.