How is ‘Gonski-style’ needs-based funding going to work for universities?

In February, a major review recommended a new “needs-based” funding model for Australian universities.

The Universities Accord final report said universities should receive more money for students from equity backgrounds, including First Nations students and those with disability. This is a similar approach to funding in Australia’s schools, introduced as part of the “Gonski” reforms a decade ago.

On Friday, Education Minister Jason Clare released a consultation paper on the design of this needs-based model.

What does this mean for university funding?

What’s in the paper?

The federal government has set a target of having at least 80% of working age people with a university degree or TAFE qualification by 2050, up from the current 60%.

A key part of meeting this is supporting more students from underrepresented backgrounds to enrol in and graduate from university. This includes students from poorer families, students with a disability, First Nations Australians and those who study in regional Australia.

These students are less likely to enrol in higher education. And when they do, they often are less likely to finish their degree than other students.

A new funding system would help support these students.

At the moment, the government provides funding to domestic students based on the course they study (for example, an engineering student gets more funding than an arts student).

But the new system would also provide funding based on a student’s background. Universities would have to provide extra academic and other supports to help these students finish their degrees.

The paper also floats the idea of extra support based on a student’s “academic preparedness” for university. The paper notes this is a “major factor” influencing the likelihood a student will complete their degree. One measure of preparedness would be their ATAR at the end of Year 12.

What is useful?

To provide support to equity students, universities are going to have to invest in new services and supports. The government wants to see them report on how this money is being used.

This will provide more transparency than we currently have for schools funding. At the same time, the reporting could also create an administrative burden.

The whole system will be reviewed after five years to see if it is improving enrolments and completions.

What is concerning?

In the accord final report, the recommendation around needs-based funding was for a “system-wide” funding scheme.

What we appear to have from this paper is more of a “bolt on” that funds students at the individual level.

This may seem like a minor detail but it suggests it’s not a wholly new way of funding the domestic student sector. It’s more a way of providing extra support to students from equity groups.

While extra support to students from equity backgrounds is crucial, it is not clear whether the proposals outlined in this paper are as ambitious as other needs-based funding models.

In the school sector, needs-based funding accounts for about 28% of the federal government’s ongoing funding. Schools with high concentrations of “need” can receive much greater financial support. There is a recognition these institutions have a much greater task in ensuring that all students reach their potential.

What is missing?

The paper is also silent on two major issues.

First, there are no dollar figures mentioned, which will obviously be key to what universities can and can’t do to support students. Last year, the Mitchell Institute modelled what a Gonski-style funding model might look like for universities. We found the overall funding per student would increase by about 11%, or A$1.3 billion per year.

Second, the consultation paper says nothing about the Job-ready Graduates scheme, which is the existing funding system for domestic students.

The final accord report was extremely clear the Job-ready Graduates scheme “needs to be replaced”. The scheme, which was introduced under the Morrison government, increased fees for courses such as arts and reduced them for those including nursing, in a bid to change what students studied. But it did not work.

Needs-based funding for the school system funds all students and schools, with extra loadings for those who need more support. At the moment, the proposal for universities seems to be a continuation of the current funding approach with needs-based funding providing extra support to equity students.

Feedback on the paper is due on August 9.

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