Tis the season for tertiary education enrolment reports as providers with high enrolments spread the good news, but the story quickly turns to “we need more funding”. Well, no, we don’t.

Enrolments are Booming…

Enrolments boomed last year mainly because the recession meant that fewer jobs were on offer (good marketing also had an impact in some places). We don’t have full year figures yet, as providers only sent in data on 31 January, but student loan figures for Jan-Sep 09 provide a good proxy. As you can see below, there was  a big jump in total borrowers (21,000 growth in 09 compared to 4,000 in 08) and borrowing for fees ($102m growth in 09 compared to $48m in 08). End of year enrolment figures will be similar.

Student Loans 2006-09 (Jan-Sep Period)

Enrolments will probably continue to boom this year, as unemployment continues to grow. The Manawatu Standard ran a piece at the weekend on booming enrolment enquiries at Massey University and UCOL, while  NorthTec is also advising students to enrol early for limited places in 2010.  There will be more such stories during February.

 …Funding Shouldn’t

Now that funding is capped (it has been since 2008, and earlier for private providers), any growth in enrolments quickly leads to claims for extra funding. I support tertiary education, but the sidebar on this site says that we are about improving the impact of tertiary education on lifting workforce productivity. Going by that goal, I’m not convinced that there are good reasons to increase tertiary education funding right now and I run through the arguments below. (NB I’m referring mainly to general tuition funding, provided within the Student Achievement Component.)

1. There is the old chestnut that we should train people rather than have them on the unemployment benefit, which sounds much more appealing when dole numbers are rising, like now. In a perfect world, that’s probably right, but we’d have to assume that:
   • they would finish the programme (many don’t, which is why John Key raised it today);
   • the training will help them get a job (We have no clear data on the efficacy of specific programmes, only averages based on broad groups of graduates. Most measures of returns on tertiary education refer to graduates, not entrants, but non-graduates usually show little benefit from tertiary education. The government needs to look at the total cost.);
   • the training will be just the right length (should people do a 3-4 year degree when there is a 1-2 year employment downturn?);
   • students enrol at the best provider for them (Choice in the tertiary education market is constrained right now. Enrolment caps on providers make it very hard to pursue a low-cost, high volume strategy, while fee maxima make it hard to pursue a low volume, high cost strategy. There are also high barriers to entry which reduce the pressures to innovate. A new private provider can seldom access government funding – thereby pricing them off the market – while ITPs are constrained from operating out of their home region.); and
   • we could easily wind back the numbers once employment picked up (Keynesianism is popular now but it is often boiled down to “the government needs to spend more in the recession”, but there’s a big difference between paying extra benefits while unemployment is high and increasing baseline spending. Once providers get more funding, it will be very hard to take it back when times improve.)
2. Tertiary education sector groups haven’t made strong cases for investment in their sector. The Industry Training Federation has probably got closest, but they mostly argue that their plans can be funded out of money clawed back from other parts of the sector. The universities have made a loud case, but they need to get more specific – research and degree graduates do not automatically improve productivity. ITPs are not currently making a clear case (and haven’t for many years, including when I represented them), while PTEs are still operating in the small box that Labour put them in, rather than being bold. Wananga are going about things differently, seeking investment via specific Maori-focused initiatives and doing it behind the scenes.
3. Inflation adjustments might be reasonable, but the main cost in tertiary education is staff and the government is seeking to constrain wage increases.
4. Regardless of what I think, the government does not think there is a need for major investment, based on today’s statement by the PM.

I don’t see a case for extra tertiary education funding now, but some targeted initiatives make sense (like secondary-tertiary transition). And if anyone wants to spend their own money on tertiary education, that’s great, but it is hard to spend your own moneywhen fees and places are capped by the government.