The majority of higher education funding were directed towards addressing the recommendations of the Accords.

Indexation of HECS/HELP loans 

One of the Budget’s key announcements for students is the change in the indexation of Higher Education Loan Programs (HELP/HECS), and other student loans. The government will provide $239.7 million over the next five years to limit indexation to the lower of either the Consumer Price Index (CPI), which measures household inflation, or the Wage Price Index (WPI), which measures changes in the price of labour. This change directly responds to recommendation 16d of the Universities Accord. 

As revealed prior to the budget release, this change will be applied retrospectively from the 1st of June 2023, meaning the 2023 indexation of 7.1 percent will be revised to 3.2 percent. This means for a student with an average HECS debt of $26,000, their debt will be cut by about $1200. Someone with a HECS debt of $40,000 will see a cut of about $1800. According to the government, the average student debt for last fiscal year was $26,494. 

This change applies for all students with HECS loans, including  students who paid off their loans at the higher indexation rate in June 2023. These students will be reimbursed the 3.9 percent difference into their MyGOV accounts. 

This change makes a difference to 2023 HECS loans with the government estimating it will wipe $3 billion from debts across Australia. However, tying debt to the movements of WPI and CPI might not provide long term relief, as it doesn’t account for the possibility of future years in which both figures could be high. 

Following the budget, the National Union of Student, has called the government to “Immediately freeze HECS indexation” and to “set a cap on HECS indexation of 4%.” The latter has been echoed by higher education experts such as Andrew Norton.  

Additionally, the budget dismisses other recommendations regarding HECS made in the Accords. These include suggestions to reduce student contributions, reduce the financial burden of repayment on low-income earners, limit disincentives to work additional hours by moving to a system of HELP repayment based on marginal rates, or review bank lending practices to ensure banks recognise that HELP loans do not place unduly limits peoples’ borrowing capacity for home loans.

As a first step, the changes provide much relief. However, it is yet to be seen whether these reforms make a long term difference to students with HECS debt. 

Commonwealth Prac Payments for mandatory placements (placement poverty)

Another budget measure announced prior to the budget’s release is the establishment of payments for mandatory placements. The government is providing $427.4 million over four years to establish a new Commonwealth Prac Payment for tertiary students undertaking supervised mandatory placements as part of their nursing (including midwifery), teaching or social work studies. The payment is $319.5 per week, benchmarked against the single Austudy rate provided by Centrelink. Other support students might be receiving is unaffected. However, the payments will be means tested which may heavily impact those who are eligible. 

Currently, there is no clear information about what this means testing will look like, however in an interview with Triple J Hack, the Hon Jason Clare, Minister for Education stated that “it’ll be broader than [youth allowance means testing measures]. It’ll apply to around 73,000 students at university or in vocational education.” He added that the final legislation will be designed in consultation with the target groups. The Minister has also credited the time needed for consultation and program design as the reason for why these placements won’t be implemented until 2025. 

As Andrew Norton, ANU Professor in the Practice of Higher Education Policy stated, the weekly payment of $319.50 is low, “If someone has to give up a job to do a placement, they are still going to be seriously out of pocket.”

The Henderson Poverty Line sets $609 weekly for a single working person, before housing costs, as the baseline for being above poverty. This means students who have to sacrifice their employment for their paid placements, and receive $319.50, will be significantly below the poverty line. 

For students in nursing courses, paid placements can be up to 40 hours each week, 37 for teaching and 38 hours for social work.  

This measure responds in part to recommendation 14 in the Universities Accord, which aims to reduce the “financial hardship and placement poverty caused by mandatory unpaid placements.” However, the Accord also recommends that employers and industry should help cover expenses for students in other professions, including speech pathology, veterinary science, engineering and clinical psychology, identifying these areas as also having onerous placement requirements, and causing placement poverty. 

The initiative is designed particularly to ease the care and teaching workforce skills shortages identified in the government’s Employment White Paper. As such, it makes sense that nursing, teaching and social work are targeted. 

This suggests that the lack of support for students in medical degrees, engineering or psychology could be  aligned to their higher future earnings compared to that of teachers, nurses, and social workers. 

Given that this is the first response to the Accord, future measures may respond to other recommendations, or broaden the reach of these placements. 

FEE-FREE Uni Ready Courses 

Other measures introduced in this budget include $350.3 million over four years for a new FEE-FREE Uni Ready Courses program. This is intended to expand access to university enabling and preparation programs, and will come into effect on the 1st of January 2025. This initiative is intended to be the first step towards meeting the ambitious target of 55 per cent of young people holding a university degree by 2050.

The Government will also spend $27.7 million over four years to “develop initiatives that break down artificial barriers and harmonise regulatory, governance and qualification arrangements between the higher education and vocational education and training sectors.” 

Woroni understands that this means the initiative would “facilitate student pathways” and work to establish “a regulatory approach for providers, providing services on both sides.” It is however, yet to be seen what this “harmonisation” will look like. 

10% Increase to Commonwealth Rent Assistance maximum rates

The government will provide $1.9 billion from the 2023 to 2028 period to increase the maximum rates payable to those who receive rent assistance payments. However, there was no change to the eligibility threshold to receive rent assistance.

The only other budget measures that substantially addressed rental affordability took aim at encouraging rental development by removing foreign investment fees on established Build to Rent properties, as well as providing $1 billion to states and territories to fund “enabling infrastructure” for the construction of new housing. 

There has been a marked increase since 2020 in the proportion of household income servicing rents for all income quartiles, and rent increases have become more common and larger on average, especially for new tenants. 

The budget’s lack of more immediate rental relief, especially for those not eligible for Commonwealth Rent Assistance, may still leave the large proportion of student tenants struggling to make ends meet. 

No increase to Youth Allowance

Aside from the Rent Assistance increase and a minor increase in jobseeker eligibility, Youth Allowance was among the majority of Australia’s welfare payments that missed out on any extra funding in this budget. This means there will be no increase to payment rates, or increases in who can receive the payment. 

This comes despite the Australian Universities Accord having earlier this year recommended a broadening of the payment’s eligibility criteria, and despite the fact that the base level payment of $319 a week sits substantially below the Australian poverty line. 

AUKUS Scholarships 

The government will provide $101.8 million dollars over seven years from 2024 to build an “industrial workforce required to support the delivery of Australia’s conventionally armed-nuclear submarines.” Notably, $16.3 million will fund 3000 scholarships in Science, Technology, Engineering and Mathematics courses relevant to nuclear powered submarines. Although the budget does not explicitly define these scholarships to support Australia’s AUKUS partnership, it is likely that the funding will directly assist in creating a workforce for the new submarines. 

The funding comes after intense weeks of student protests against militarisation in Universities, notwithstanding popular campaigns from last year such as “Welfare, not warfare.” 

But is it enough?

The budget fails to address the critically low levels of researching funding in higher education. The situation is likely to be worsened with caps on international student enrollments, where international student fees not only stimulate higher profits but also fund research in higher education while research funding has wavered in the last three decades. 

The NUS has also called on the government to “repeal the Job Ready Graduate Scheme”, echoing the concerns of many students and experts. 

The Jobs Ready Graduate Scheme intended to steer students to STEM courses, to match Australia’s skills shortage. The scheme, however failed to do so, and instead placed an unfair burden on students entering non-STEM courses by setting large student contributions on these courses. 

This year’s budget makes no commitments to change the Scheme, rather continues in the same line, prioritising skills in “clean energy, construction, tech and advanced manufacturing.” This places students in humanities, arts and social science courses at a distinct disadvantage, with many accruing over $100,000 in HECs debt, while the average debt for a student in STEM is $28,000. 

The budget does not mention any changes to student contributions, however,  consultation with students is underway for the creation of a “needs-based system”. But this poses concerns about whether the government will use the “need-based system” will only cater to students studying in the “priority skills”, instead of the government supporting students holistically in all areas of interest.  

Changes to the student contribution system are unlikely to manifest before the creation of the Australian Tertiary Education Commission. The Commission, which is intended to be established by mid-next year, will be “responsible for tertiary education system stewardship, delivery for funding arrangements for higher education, ongoing tertiary harmonisation and data collection and reporting.” Changes to student contributions will likely be deferred to the commission.