How universities are funded
University funding is complex and often, little understood.
The Australian university system is largely funded through Government research and teaching grants and student fees supported by a Government-backed loan scheme. Other funding sources include state government funding, overseas student fees, investment income and income from contract research and consultancy.
Government funding for universities is detailed within the annual Federal Budget.
All universities are also required to provide financial statements to the Department of Education, outlining sources of revenue and expenditure.
Grants for teaching
The Commonwealth Grant Scheme (CGS) is the biggest single source of Government funding for universities. It is allocated on the basis of the number of full-time equivalent domestic students in Commonwealth Supported Places (CSPs).
For each CSP, a university receives a Commonwealth contribution from the CGS. The amount of the Commonwealth contribution depends on field of education. There are eight different levels of Commonwealth contribution or ‘funding clusters’.
More information is available from the Department of Education and Training.
Until 2017, universities received CGS funding for as many places as they wished to offer (the ‘demand-driven system’). In December 2017, the Minister capped total funding at 2017 levels. From 2020, the cap will rise by a small amount each year – subject to a new performance-based funding system that is yet to be announced.
student contributions and Loans
Commonwealth Supported Places or (CSPs) are funded by a mix of Commonwealth contributions through the Commonwealth Grant Scheme and student contributions. Like Commonwealth contributions, student contributions vary by field of education.
Information on Commonwealth and student contributions in different disciplines is available here.
The Higher Education Loan Program (HELP), formerly known as HECS, is available to students in a CSP. Students using a HELP loan do not need to pay any university fees upfront, but instead make contributions once they are in the workforce earning an income.
The loan does not have to be repaid until the borrower is earning more than a specified amount, known as the ‘repayment threshold’. Payments are a percentage of borrowers’ annual earnings and this repayment rate rises as the borrower’s income increases.
HELP has enabled millions of Australians to gain access to higher education, and to realise the benefits that higher education brings. By enabling students to defer paying their fees until they are earning a premium from their education, HELP facilitates access to university for students regardless of their financial background.
HELP also includes other loans for different types of students and different types of fees:
- FEE-HELP: for domestic, non Commonwealth-supported students
- OS-HELP: to assist domestic students undertaking study overseas
- SA-HELP: to cover the cost of the Student Services and Amenities Fee.
Repayment thresholds and rates are the same for all types of HELP loans.
Further information on HELP is available here.
Australian university research is funded through a mix of contributions from the Australian Government, state and territory governments, industry partners and philanthropic sources.