University fees: what students pay in deregulated markets

Overview For more than a year Australia has debated deregulating university fees for domestic undergraduates. The issue is controversial, but for many years fees have been deregulated for international students and domestic postgraduate coursework students. This report looks at how much these students pay for their courses, and analyses differences between these fees. Australian universities responded enthusiastically to the deregulation of the international and domestic postgraduate coursework markets. Although the fees charged are often high, strong enrolment growth shows students are willing to pay them. Last year, for example, 312,500 international students were enrolled in Australian universities, nearly twice as many as in 2001. They comprise nearly a quarter of all enrolments. Student fees from deregulated places are important to university finances. They provided a fifth of public university funding, or nearly $6 billion, in 2013. Public universities earned at least$4.3 billion from international students in 2013, while most of the remaining amount came from fee-paying domestic postgraduates. For both international and domestic students, fees vary by discipline and especially by university. International students usually pay significantly more, and never less, than domestic students in the same course. Their fees are set in a global, commercially-oriented market in which prestigious universities charge international students a substantial fee premium over less well known universities. In some disciplines, students at the most expensive university pay more than twice as much than students at the cheapest university. Despite the cost, many international students prefer expensive universities. In most disciplines high-fee universities enrol more international students than low-fee universities. Australian students are less willing than international students to pay a large prestige premium. They and their prospective employers understand the strengths of local universities. They know that research-driven international university rankings are an imperfect guide to the quality of graduates. Many Australian postgraduate students already have a foothold in the labour market. They have less need to impress employers with university prestige. Even so, in several disciplines domestic students, like international students, prefer the more expensive universities. In some postgraduate courses, the market is affected by price-controlled government-supported places. This is especially true of education and nursing degrees. These places help keep fees down for domestic students without a government-supported place. Many universities offer full-fee places at less than what they receive for a government-supported student. A future Grattan report will explore what profits universities make on fee-paying students and the policy implications of what happens to the money