Reforming Tertiary Education Access and Financing Policies
Across society, school students who attain the same level of educational attainment are equally likely to enter university. Strikingly, this result holds for the United Kingdom, Australia, and the United States. The challenge is that student attainment depends fundamentally on school demographics – it’s much harder for students in low-SES regions to do as well as those in high-SES regions.
The School of Economics hosted the RC Mills Memorial Lecture on Thursday 30 May 2024. This year’s keynote speaker was Professor Lorraine Dearden, a global leader in tertiary education access and funding, having contributed as a young Australian economist to the analysis underlying the 1980s reforms and then pursuing such research over subsequent decades. Her research also includes evaluating education policies in the United Kingdom, the United States, Brazil, Colombia and Indonesia.
Lorraine Dearden has been a Professor of Economics and Social Statistics at University College London since 2015. In 2021, she won the prestigious Economics and Social Research Council Impact Prize for Public Policy for empirical and policy work used to reform student loans in Colombia
In presenting the research results, Professor Dearden stressed the core implication of those results: the fundamental importance of investment in early years support services, and primary and secondary education, especially in low SES children. “Ultimately, if we want to improve access to tertiary education, we have to improve the quality of all pre-tertiary education. The evidence is clear that even pre-primary education is very important in achieving these outcomes, let alone primary and secondary education.”Professor Dearden made these comments while delivering the 2024 RC Mills lecture.
From left: Chancellor Belinda Hutchinson AC, BEc Sydney, Professor Lorraine Dearden, Professor Garry Barrett, Jane Spring AM, Professor Bruce Chapman AO, and Professor Hugh Harley at the 2024 RC Mills Memorial Lecture.
Richard Charles Mills was Professor and Dean of Economics at the University of Sydney from 1922 until 1945. He was also an outstanding educationalist, including as Chairman of the Universities Commission from 1942; as one of the initiators of the Australian National University; and, from 1950, as Chair of the funding commission which largely established the post-war tertiary sector in Australia. The University established the annual RC Mills Lecture in the late 1950s after Professor Mills’ death. This year’s lecture re-established that tradition after a long pause and welcomed the attendance of 12 members of the RC Mills Family, including RC Mills’s daughter-in-law, Margaret Mills.
Reflecting on her career to date, Professor Dearden stressed the importance of “GEDM” – good economics, data and methods. At root, this means interrogating the data in great detail, and not being seduced by summary statistics, such as averages. With student loan repayments, for instance, an average of all student loans will necessarily include those that are closer to being repaid and so give no meaningful insight into the repayment serviceability of new loans. Likewise, using average incomes to assess serviceability will be skewed by higher incomes. In other words, GEDM in this case means understanding the different cohorts of borrowers, particularly based on the distribution of incomes.
The Australian HECS system of income-contingent loans is far superior to the time-based repayment system we see in many other countries because it provides an in-built mechanism to allow for the different circumstances of students and graduates. By better managing risk, it promotes better equity of outcomes.
Professor Dearden shared an analysis conducted for the Colombian government comparing income-contingent student loans with a time-based repayment system. The striking conclusion was that over the long term, these loans also delivered a much better repayment outcome for the government – slower in the beginning but nearly 50% higher repayment over the long term. By making repayments more manageable for young graduates, fewer dropped out altogether, leading to higher aggregate repayments to the government over time.
In discussing these results, Lorraine paid tribute to Emeritus Professor Bruce Chapman of the Australian National University, who was instrumental in the establishment of the Australian HECS. In turn, Professor Chapman proposed the vote of thanks to Professor Dearden, reflecting on their working relationship of nearly four decades and in particular to Professor Dearden’s laser-like focus on interrogating data to provide insight. As Professor Dearden said, “Nothing gets the attention of policy-makers like using data to paint a compelling picture”.
Written by Professor Hugh Harley from the School of Economics.
Hero Image: Professor Lorraine Dearden presenting at the RC Mills Memorial Lecture. Photo by Murray Harris Photography.