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A calculation of lesser doom

    IRU News    |   16 June 2014

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    Conor King of the Innovative Research Universities group says that suggested massive fee increases to make up for a 20% cut in overall Commonwealth funding are not necessary. Calculations of such increases are based on “clinging” to the existing “imperfect” clusters and would produce 16 different student charges, compared with just the three different charges student currently face.
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Cha chingKing has produced a table (you really need to see Fees Table 2 to follow this) which shows how universities could offset the lost Government revenue, with options for:

  • a single common charge;
  •  increases to the current three bands; and
  • a four band system to match the proposed five clusters, with the same charge for clusters 1 and 5 similar to the current arrangements.

King calculates that, for universities to recover the reduction through increases to student charges requires, an overall increase of 25% to 30% across all students at an average fee per student of around $10,500.

Based on total 2012 student load, King says the sector would have to raise fee revenue, overall, by 26.4% by 2016. One approach universities could take therefore is simply to increase the three current student charges by a uniform 26.4%.

Alternatively King calculates that universities could just increase the three student fee levels by a uniform $2163 a year. Under such an approach the cost of a year of law or business would go up by just over 20% to $12,686, while the cost of a year of arts or nursing would go up by 34% to $8,470 and engineering or science would go up by 24% to $11,150.

If a university wanted to charge a single uniform charge that recouped the government’s cuts it would be around $10,362 a year. The final calculations would vary across universities depending on their specific student load.

According to King, comment to date has focused on how to preserve total revenue at the level of each particular discipline, which is clinging to the existing clusters, “whose failings the Lomax-Smith report well documented”.

As the starting point for future planning, each university needs to determine a simple set of charges that will raise total revenue from student and government equal to the current revenue. They could use these charges in 2016 knowing that revenue per student would be stable or use them as the basis to set fees that raise additional or lesser revenue.

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