Higher education benefits the public and the individual
The Australian public benefits greatly from higher education contributions, although the cost is mostly shouldered by students, according to recently released data from the Organisation for Economic Co-operation and Development (OECD). The statistics are a result of analysis based on investment returns, taking financial benefits and taxes into consideration.
The Australian trend runs contrary to other OECD countries and is second only to Britain regarding public profits from higher education. The private (or individual) rate of profit excelled the public rate in 24 other countries, including the US and Germany.
David Richardson, an economist from The Australian Institute, believes the study “demolishes the claim” that individuals get greater benefits than the public from higher education. According to Richardson, the benefits to the public are even greater than the OECD confirms as the analysis only includes profits that are taxed by the government. The report doesn’t evaluate the ongoing economic windfall of associated benefits such as civic engagement, improved health outcomes and critical thinking skills. Richardson cited a study by the OECD that revealed extra per capita output of 4 to 7 per cent for every additional year spent in higher education.
To put the findings in perspective:
- For every $1 spent on higher education, the government gains a return of $6 (through taxation, plus a reduction in unemployment benefits)
- A male graduate can expect a return of only $3.20 for every $1 spent on education
- While women gain a return of only $2.50 per $1 spent on education
In another surprise finding, the study also revealed that Australian students contribute more toward education than students in other OECD countries. Around 55 per cent of tertiary education costs are paid by the Australian student, including tuition fees, which is more than 20 per cent greater than the OECD average. Federal government initiatives to cut funding to higher education will only exacerbate the disparity, according to education experts.
What does it all mean according to the experts?
Tim Pitman, from Curtain University’s Centre for Student Equity in Higher Education said:
“At a certain point some people will opt out of higher education because they perceive it to no longer be a worthwhile investment.”
Gavin Moodie, adjunct professor of education at RMIT University, believes the changes proposed by the government will be detrimental, with the potential for increased costs to lower demand for tertiary education.
Spending on tertiary education by the Australian government is already at a very modest 0.7 percent of GDP, and proposed cuts will almost certainly have a noticeable affect on Australian students. Average spending by OECD countries is 1.1 percent. Many public and social benefits of higher education remain undisclosed, as they are often an indirect outcome of the increased economic participation by individual graduates.
The Australian government initiative will further cement the position of Australia as an exception to the OECD norm, where increased private tertiary investment is geared to work in tandem with public investment, rather than replace it.
Studies have repeatedly revealed the individual and social benefits of higher education
Individuals can expect:
- Higher wages
- Better health
- Greater life satisfaction
While social benefits include:
- Higher national average incomes
- Healthier populations
- More harmoniously functioning society