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Australians think students are being asked to pay far too much for their degrees. Just under half (47%) of Australians\u00a0surveyed by YouGov<\/a>\u00a0in June 2025 believe a worker on an average income should be able to pay off the debt for a standard three-year degree within five years. When it comes to the cost of a degree, 58% believe a student should pay A$5,000 or less per year \u2013 less than a third of what arts students now pay.<\/p>\n Just under one in five, or 18%, believe a standard degree should be free \u2013 as it was 50 years ago, when the Whitlam Labor government\u00a0introduced free university education<\/a>\u00a0in 1974. This ended in 1989, when in\u00a0a world first<\/a>, the Hawke Labor government introduced the income contingent Higher Education Contribution Scheme (HECS) \u2013 which is still with us today. It has continued to evolve, with costs to students rising with successive governments since.<\/p>\n Today, thanks to the\u00a0Job Ready Graduates<\/a>\u00a0scheme introduced by the Morrison Coalition government in 2021, the cost of an arts degree has risen to over A$50,000.<\/p>\n Unsurprisingly, the\u00a0Universities Admissions Centre found<\/a>\u00a0that concern over HECS debt influences the decision to attend university for 40% of Year 12 students.<\/p>\n The evolution of Australian universities has passed through three distinct phases. These were first defined by Hannah Forsyth and paraphrased\u00a0by John Quiggin<\/a>\u00a0as: the sandstone era from 1850 to 1945 that saw each state establish its own university; the era of expansion from 1945 to the election of the Hawke Labor government in 1983; and the era of transformation from the 1980s to today.<\/p>\n The post-World War II era of expansion saw the Commonwealth take over primary funding for universities, while leaving the states in charge of governance. This split responsibility continues to the present day as a source of regulatory incoherence.<\/p>\n In this era of sweeping social and economic change, ahead of the 1972 election in his \u201cIt\u2019s Time\u201d speech, Whitlam declared:<\/p>\n We will abolish fees at universities and colleges of advanced education. We believe that a student\u2019s merit rather than a parent\u2019s wealth should decide who should benefit from the community\u2019s vast financial commitment to tertiary education. And more, it\u2019s time to strike a blow for the ideal that education should be free.<\/em><\/p><\/blockquote>\n For many, Whitlam\u2019s 1974 reforms remain the high water mark. But while university education was free of charge, it was not freely available. Limited places meant problems of equity and access remained.<\/p>\n The Dawkins reforms in the 1980s, named for education minister John Dawkins in the Hawke Labor government, remade Australia\u2019s higher education sector. In many ways, the basic structure and market orientation that he put in place remain intact, including incentives for universities to compete internationally and operate like corporate entities.<\/p>\n Competition between universities and their embrace of a profit motive has suited successive governments. It has meant universities increasingly raise revenue from market-based sources, including student fees, rather than relying on the public purse. In 1995, the\u00a0federal government spent<\/a>\u00a00.9% of GDP on universities, with this dropping a third to 0.6% in 2021 (implying a $6.5 billion reduction).<\/p>\n To put it another way, in the 1980s the federal government contributed around 80% of the sector\u2019s funding,\u00a0now it is closer<\/a>\u00a0to 40%, while the number of students has more than tripled to over 1.6 million.<\/p>\n Dawkins increased the size of the sector, which opened up access and led to a\u00a0more than doubling<\/a>\u00a0of the percentage of Australians who study at university (from 2 in 10, to 4 in 10 people today). He did so by transforming colleges of advanced education and institutes of technology into universities.<\/p>\n Dawkins and Hawke built a system that fused Labor\u2019s aspiration for fairness and equality with their own stamp of economic rationalism that was then very much in vogue.<\/p>\n Government policies included floating the Australian dollar to integrate the Australian economy with global markets, allowing foreign banks into Australia, reducing tariffs, and privatising or corporatising government- owned enterprises such as QANTAS, Telecom (now Telstra) and the Commonwealth Bank. University policy directed towards corporatisation and competing in international markets was yet another example.<\/p>\n Under\u00a0the new HECS scheme<\/a>, university students were charged $1,800 a year, regardless of the course they were studying. Repayments, at 1% of income, started once their pay reached $22,000, rising to 2% at $25,000.<\/p>\n Domestic enrolments soared and lecture halls heaved as the system welcomed thousands of new students, many of them the first in their family to attend university.<\/p>\n During the Dawkins era of rapid growth, the Hawke government introduced a full-fee-paying system for international students.<\/p>\n Higher education expert Andrew Norton from Monash Business School\u00a0described it<\/a>\u00a0as one of the most important higher-education policy decisions ever made: \u201cPublic universities proved to be surprisingly entrepreneurial, sparking double-digit annual international enrolment growth rates through the 1990s.\u201d<\/p>\n The nation\u2019s universities thrived among international competition, becoming the envy of many other nations in their ability to attract the best and brightest from around the world. In 2024,\u00a0international students made up<\/a>\u00a026% of total enrolments in Australian universities.<\/p>\n The shift to attract international students had many flow-on effects, including Australian universities increasingly playing the international rankings game. These are scored by organisations such as QS and Times Higher Education with universities vying to become one of the top 200, 100 or even 50 universities in the world. The scoring is weighted in favour of research over student satisfaction, leading universities to prioritise the former while the latter has eroded.<\/p>\n Australia has achieved remarkable success in international university rankings. In the\u00a02026 QS rankings<\/a>, for example, Australia has nine universities in the top 100, more than any other nation except the United States and the United Kingdom. And on a per capita basis, Australia far exceeds those nations.<\/p>\n When it comes to university rankings, Australia outperforms the world. This matters not just for bragging rights or prestige, but because rankings are a key attractor of international students.<\/p>\n This has produced a self-reinforcing cycle. Universities prioritise research, which boosts their rankings, thereby attracting more international students, whose course fees provide the income to fund research, and so on.<\/p>\n Notably, the education of Australian students does not fit within this dynamic; at best, they are cross-subsidised by the additional income from their international counterparts. The system incentivised this as government funding declined, especially so for major universities able to compete on the world stage.<\/p>\n The Dawkins reforms sowed the seeds for decades of over-reliance on international students and the revenue they generate. They also propelled universities down an increasingly corporatised path. As the editors of the 2013 book,\u00a0The Dawkins Revolution, 25 Years On<\/a>, put it:<\/p>\n Dawkins [\u2026] turned colleges into universities, free education into HECS, elite education into mass education, local focuses into international outlooks, vice-chancellors into corporate leaders [\u2026] He remodelled higher education and how it was funded in only a few years.<\/em><\/p><\/blockquote>\n Such radical change has had many unintended consequences with which governments have been grappling ever since.<\/p>\n A change of government in 1996 brought new policies under Liberal prime minister John Howard. This included replacing the single course fee under HECS with differential course fees, whereby students able to earn higher salaries on graduation (in areas such as business and law) were charged more.<\/p>\n The sector underwent significant reform again in 2012, with the Gillard Labor government scrapping capped student places to usher in the demand-driven system recommended by the 2008 Bradley Review.\u00a0Universities could enrol<\/a>\u00a0unlimited numbers of Australian bachelor-degree students into any discipline other than medicine and be paid for each of them.<\/p>\n The number of bachelor-degree students soared but the system groaned under the expense. As\u00a0Andrew Norton observed<\/a>:<\/p>\n The policy ended because of cost. By 2017, demand-driven funding had caused spending to increase by more than 50% in real terms since 2008. From 2013 to 2017, every federal budget included an attempt to curb higher education spending, while keeping the demand-driven system.<\/em><\/p><\/blockquote>\n The Turnbull Coalition government ultimately responded by freezing bachelor-degree spending.<\/p>\n The system veered off the rails with Morrison\u2019s\u00a0Job-Ready Graduates<\/a>\u00a0in 2021. This blunt, ill-conceived policy removed the link introduced by the Howard government between student fees and graduate earnings in favour of setting prices based upon what the government wanted students to study.<\/p>\n The idea was that a strong price signal would steer students away from the arts and humanities into areas of national labour shortage such as mathematics, agriculture and nursing. It took the idea of a market for higher education to an entirely new level, distancing the system even further from the notion of education as a public good.<\/p>\n The policy failed in its own terms and also failed the nation as a whole. While the plan was, for example, to use high prices for arts degrees and low prices for agriculture degrees to change student choices, it was based on a fundamental misunderstanding of how students choose what to study.<\/p>\n A potential history student did not seek a career in farming, nor did a student passionate about philosophy shift to mathematics. Instead, it made the entire university system more socially regressive and inequitable.<\/p>\n Price has not proved to be a significant determinant of choice between degrees.\u00a0One study found<\/a>\u00a0that fewer than 1 in 50 students changed their field of study due to differential fees.<\/p>\n But while price has little impact on what degree to enrol in, the cost of a young person\u2019s preferred degree can have a life-defining influence on whether they study or not. Not only are students now lumbered with higher fees and debt, but many are dissuaded from going to university at all.<\/p>\n Job Ready Graduates introduced deep unfairness. Arts degrees covering areas such as history and English literature moved to the highest fee category with business and law, despite arts graduates earning the lowest graduate incomes and often coming from the most disadvantaged parts of society.<\/p>\n An arts student incurs a debt of $16,992 per year or $50,976 for three years of study, compared with $4,627 a year or $13,881 for three-year degrees in areas including agriculture, statistics and mathematics.<\/p>\n The prices will increase further in 2026. Many arts graduates never earn enough to pay this off because of their low salaries and the ongoing indexation of their debt, effectively incurring a debt until death.<\/p>\n The annual cost of an arts degree is now nine times the original 1989 contribution, a rate well ahead of inflation. Student fees\u00a0have increased<\/a>\u00a0from a third of the salary earned by an arts student on graduation to more than two-thirds.<\/p>\n Extracting more fees from students has led to student debt reaching astronomical levels. It peaked at more than\u00a0$81 billion<\/a>\u00a0before the Albanese Labor government reduced debts by 20% and shaved $16 billion off the total.<\/p>\n Record high fees and the associated debt is only one of the major pressures faced by Australian students. Like the rest of the community, they have also been hit by cost-of-living pressures that have left many in poverty.<\/p>\n As a result, the proportion of students having to support full-time study with full-time work\u00a0has doubled<\/a>, from 1 in 14 students in the 1990s to one in seven in 2023. This mix is devastating for students and causes many to drop out. Full-time work or full-time study is difficult enough, let alone trying to combine the two.<\/p>\n Students are taking longer to pay off their debt,\u00a0now taking<\/a>\u00a09.9 years on average compared to 7.3 years in 2006. Government policies that permit delaying repayment to higher income levels will further slow this, meaning many graduates will hold student debt well into their thirties as they face other financial challenges, such as securing a home loan or starting a family.<\/p>\n The Albanese government\u2019s one-off decision to wipe 20% off student debt will cut $5,520 from the average graduate debt of $27,600. This makes a meaningful difference for graduates yet to pay off their debt, but it does nothing to address the problem with the level of the fees in the first place. In particular, the policy provides no benefits to new students.<\/p>\n It is akin to addressing the housing crisis by paying off 20% of every current mortgage without doing anything to reduce the cost of housing.<\/p>\n The deep problems with student fees are well known. The interim report of the Australian Universities Accord, released in June 2023, said the Job Ready Graduates package\u00a0needs to be fixed<\/a>\u00a0\u201cbefore it causes long-term and entrenched damage\u201d and that without change the higher education system \u201cwill rapidly become unfit for purpose\u201d.<\/p>\n New students will be saddled with the consequences of Job Ready Graduates for the long term. Every day we delay a fix is a bad day for the current cohort of students.<\/p>\n The Productivity Commission joined the call for a \u201cnew funding model as a priority\u201d given the \u201cdesign flaws\u201d of Job Ready Graduates.\u00a0It said<\/a>\u00a0the \u201cdifferences in student contributions by perceived labour market needs fail to meet their goals while arbitrarily increasing debt burdens on some students\u201d. The Accord\u2019s final report in February 2024, highlighting this unfairness, found the student fee structure needs to be replaced.<\/p>\n The government has yet to act on this. Instead, students must wait for the newly established Australian Tertiary Education Commission to design a new funding and fees model.<\/p>\nFree education<\/strong><\/h4>\n
Profit in universities \u2013 from the 1980s<\/strong><\/h4>\n
International students: a huge change<\/strong><\/h4>\n
Unlimited bachelor degrees \u2013 at a cost<\/strong><\/h4>\n
$50,000 arts degrees<\/strong><\/h4>\n
Devastating student pressures<\/strong><\/h4>\n
Urgent need for fixing<\/strong><\/h4>\n