Free Market in Education

Radical plan to lift graduates | The Australian

THE Rudd Government will remove caps on the number of university places and allow student demand to drive an ambitious target to raise the number of qualified graduates entering the workforce.

In flagging the most radical shakeup of the university sector since the Dawkins reforms of thelate 1980s, Education Minister Julia Gillard yesterday committed to abolishing the cap on commonwealth-supported places by 2012.

Ms Gillard emphasised that the new system, which broadly follows the Bradley review into higher education, would not involve students being given vouchers to cash in; rather, universities would be funded according to how many students they attracted. Under the government target, 40 per cent of 25- to 34-year-olds will hold a bachelor or higher degree by 2025, up from 32 per cent.

To guard against course standards falling as universities expand, a new national regulator will be established to accredit providers and ensure quality.

The proposed reforms have raised concerns that the new "student-centred, demand-driven" system could hurt regional campuses, create too many graduates in unneeded skills areas and force universities to cut unpopular but perhaps worthwhile courses.

The Government is expected to announce a range of measures to counter potential imbalances when it provides funding details at the time of the May budget, including funding for the higher cost of rural provision. It has ruled out removing the cap on HECS fees charged by universities.

In a speech to be delivered in Sydney today, Ms Gillard is expected to outline the future for an expanded vocational education and training sector.

Many of the students the Government is aiming to get into university will probably be "second-chance" students who do not get into university on their school scores and have to study at TAFEs.

"Funding that meets the demands made by students, coupled with exacting targets, rigorous quality assurance, full transparency and an emphasis on equity, is the only way Australia can meet the knowledge and skills challenges confronting us," Ms Gillard told the Universities Australia conference in Canberra yesterday.

Ms Gillard's reform agenda broadly endorses the vision set out by Denise Bradley in her review released in December, which came with about $7billion of recommendations.

The Government has added five years to the Bradley participation target, extending it from 2020 to 2025. It is holding off announcing spending measures until the May budget.

Ms Gillard warned that the economic crisis would limit the capacity of the Government to increase funding in the near term.

"Budgetary constraints will affect the immediacy of our response. We can't implement it all today or tomorrow," she said.

From 2010, the Government will raise the cap on over-enrolments at universities from 5per cent to 10 per cent to allow universities to prepare for the change. Once the cap is removed, universities will be funded according to how many students they attract.

More youngsters will stay at school simply because there are fewer jobs for those who leave early.

Getting a degree is an excellent investment

Ross Gittins
February 14, 2009

IF RECESSIONS are anything to go by, one thing we can expect this time is a rise in the year 12 retention rate. More youngsters will stay at school simply because there are fewer jobs for those who leave early. Similarly, more youngsters are likely to go on from school to university.

But is this a good thing? Depends. It's not good if the youngsters do not want to be there, are not given subjects to study they find interesting and end up disrupting those who do know why they are there.

If those who stay on do develop an interest in what they are studying, if they can see the wider possibilities that further education opens up, they and the economy will end up better off. That requires maturity, so maybe it is not so bad to keep youngsters in the system until they have had time to think things through.

But the trouble with education beyond the minimum leaving age is that it involves exercising a discipline that is hard enough for oldies, let alone young people — delayed gratification.

There is more to further education than making money, but for most people money is a big part of it. If they can find a job, young people are tempted to leave education early because they cannot wait to start earning — and spending — their own money.

What is much harder for a young person to see is that if only they delay their entry into the working world for a few years until they have gained more education, the money they will earn over their lives is likely to be a lot greater.

If you were to do an economics, commerce or business degree, one of the many things they would teach you is how to estimate the monetary benefits of getting such a degree. The method is explained in a book by Jeff Borland, professor of economics at the University of Melbourne, Microeconomics: case studies and applications. It is a great little book I recommend to university students having trouble seeing the practical relevance of all the dry micro theory they are being taught.

"The golden rule for optimal decision-making is that a decision-maker should only take an action if the addition to benefits (marginal benefit) from that action is at least as great as the addition to opportunity costs (marginal cost)," Professor Borland writes.

That is, most decisions involve costs as well as benefits, and you have to weigh them against each other to see if there is a net benefit. And if you are deciding whether a degree is worth it, you have to take account only of those costs and benefits peculiar to the decision to go to uni — that is, the marginal costs and benefits.

So you do not just find out how much graduates typically earn, you also have to find out the typical earnings of non-graduates because it is only the difference between the two that is relevant.

When you measure the costs involved, you look at the cost of the higher education contribution scheme (HECS), any incidental fees and the purchase of textbooks, but you ignore the living costs you incur while doing your degree. Why? Because you will have living costs whether or not you go to university. But the costs you have to take account of are not just those you pay out in cash. It is the opportunity cost that matters. And the big opportunity you forgo by going to university full time is the money you could have earned from a full-time job.

This turns out to be by far the biggest cost: the income you give up while you are studying (a fact those youngsters desperate to quit education and start earning intuitively understand).

Here you find out the typical earnings of a young person without university qualifications and subtract the typical earnings of students from their part-time jobs.

It turns out that acquiring a degree is like making an investment: the costs are up front, whereas the benefits do not start until you have graduated and are employed, but then they flow every year of your working life.

Another thing you learn at university is that, if you have money coming in and going out over a many years, you need to put all the flows onto a common basis so they can be validly compared.

In 2000, Professor Borland examined the case of a student aged 18 who took three years to complete a degree. He found this would add an average of $450,000 to a graduate's lifetime earnings, compared with an opportunity cost of $50,000.

This is a gain of more than $15,500 a year (in dollars of year 2000 purchasing power) for every year until retirement.

It is equivalent to a 14.5 per cent a year return on the initial investment for every year spent working.

Not many investments are paying that well.

an immigrant Chinese father accused of trying to bribe a teacher to give his son a favourable assessment for selective school entry

Asian values are no bad thing in the classroom - Opinion - smh.com.au

Given the shape of Australia's education system, it is hardly surprising to find an immigrant Chinese father accused of trying to bribe a teacher to give his son a favourable assessment for selective school entry.

The father, Quinghua Pei, has correctly read the landscape: a fine education is the key to upward mobility, and one of the greatest gifts a parent can bestow.

After decades in which governments have overendowed private schools, underfunded comprehensive schools and elevated parental choice to a mantra, it is little wonder allegations of cheating have come to light. Denied any real choice, some parents are desperate enough to try anything to secure their child the best education.

Parents with $20,000 a year to spare have the choice of buying their children an elite education at a private school in the belief it is the best. Well-off parents have been able to buy their child entrance to university should he or she have missed out on a HECS place, to the exclusion of poorer students with higher scores. In effect, that is like buying them a higher UAI - not a million miles off Quinghua Pei's action in trying to buy his son a better assessment ranking. Private school fees are legal, and so, too, university fees that allow people to jump the queue. But slipping teachers money to try to secure preferential treatment is not allowed.

Poorer parents who set a premium on a first-class education pin all their hopes on the selective school. It is widely believed - and backed by HSC results - that comprehensive high schools are second-best academically. It was not always the case. The more money that flowed to private schools, especially under the Howard government, in the name of "parental choice", the less there was to lift the standards and profile of the comprehensive schools and to maintain a critical middle-class student mass.

What we have now is frenetic competition for places in selective high schools. The selective high school is for many parents the light on the hill. It is no secret Asian parents, particularly those from Chinese background, put a high premium on selective schools. There is much debate as to why Chinese - and Jewish - parents rate education so highly. Is it genetic? Cultural? Is it that both ethnic groups come from long traditions of literacy and scholarship that have survived to this day? In the case of parents from Singapore and Korea, is it that they themselves have been beneficiaries of first-rate education systems? Whatever the reason, Australia can be thankful so many Asian parents, including economically disadvantaged ones, put such store on intellectual attainment. It is their children who will help turn Australia into a clever country, and not just in commerce, science and medicine, but in revitalising the culture.

Recently, for example, Nam Le, a young Vietnamese-Australian short story writer, won a prestigious international prize for his first book.

In contrast to Asian parents, too many parents from Anglo or other cultural backgrounds from poor backgrounds have a lackadaisical attitude to their children's schooling. Many are actively hostile to school, or simply lack the interest or skills to help. Their children, even if bright, may not get to sit the selective schools test because their parents did not bother to fill out the form.

We live in a country in which sport is king, and in which clever children often hide their talents to survive in the playground. The big problem in Australia is not the pushy parent. It is that too few parents from poorer neighbourhoods understand the power of education to transform their children's lives.

In the race for a selective school place, Asian parents are derided for embracing coaching colleges and for not letting their children "be children". These parents are not fooled by the blandishments of education department officials who insist coaching makes no difference to the results. Practice and hard work always make a difference. And the hard work is evident in the domination of top selective schools by students from Asian backgrounds. It is no mystery; the success of these students is not to be sneered at but to be applauded.

The reverence for education and success can go too far; the pressures on some children are too great. Some children are terrified of letting their parents down and of losing their love, and of parents "losing face". In the biography of Lang Lang, the acclaimed Chinese concert pianist, his father's single-minded dedication to the son's success emerges as terrifying. Then again, Lang Lang triumphed in an arena where most fail. He was robbed of a childhood - but so, too, are many Australian child swimming proteges who ply the pool for years in pursuit of future Olympic glory. Many Australians have no qualms about the sports stars' lost childhoods but are deeply suspicious and disapproving of the effort so many Asian children put into their studies.

In his apparent effort to secure his child the best possible education, Quinghua Pei went too far. He grasped the fundamentals of the education system - that it is divided into well-regarded private schools for the well-off, low-status comprehensives, and intellectually oriented selectives.

But in a system in which money usually can buy special treatment, a place in a selective school is still the one thing money can't buy.