3.6 Financial support for Aboriginal and Torres Strait Islander students

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The Panel understands the critical importance of financial support for all students to succeed in higher education. For Aboriginal and Torres Strait Islander students, the reduction or removal of financial barriers to participation in higher education has been deemed crucial to widening their participation (James & Devlin 2006, p. 7; Pechenkina & Anderson 2011, p. 11).

Given the relatively high proportion of Aboriginal and Torres Strait Islander people from low SES backgrounds and with children to support, a progressive income support system and other forms of student financial assistance is essential to their access to and completion of university courses. The Panel believes that while recent reforms will have provided a much needed boost in support to those on the lowest incomes, more can be done to simplify financial support arrangements, remove existing anomalies and monitor the ongoing needs of Aboriginal and Torres Strait Islander students.

3.6.1 Income support

Current situation

Australian higher education students have enjoyed bipartisan support over many decades for progressive financial support programs enabling lower-income students to attend universities. The introduction of income-contingent loans through the Higher Education Contribution Scheme in 1989, followed by the Higher Education Loan Program in 2005, were world-leading policy initiatives that have been maintained by successive governments for over 20 years.

Student income support

The ABSTUDY scheme is an ongoing special measure to assist in addressing the educational disadvantage of Aboriginal and Torres Strait Islander people. It provides a means and income-tested living allowance and a range of supplementary benefits for Aboriginal and Torres Strait Islander students. Some supplementary benefits are also available to part-time students.

Eligible Aboriginal and Torres Strait Islander higher education students may, however, choose to access mainstream student income support payments through Austudy and Youth Allowance. They may also be eligible to apply for mainstream scholarships, Postgraduate Award payments and Higher Education Loan Program support, all of which provide various kinds of financial support to undergraduate and postgraduate students, not specifically targeted to Aboriginal and Torres Strait Islander students.

Student income support payments were recently reformed

Following the Bradley Review and the Review of Student Income Support Reforms in 2011, over $2 billion in income support payments have been retargeted to students in greatest need.

The recent reforms have provided additional financial support to student income support recipients through the lowering of the age of independence, an increase to the parental income test threshold, new student start-up and relocation scholarships, amendments to criteria to determine independence from the parental means tests, an increase to the personal income threshold, and the extension of mainstream income support to masters by coursework students (from 1 January 2014). These reforms are still being progressively implemented, yet the Panel notes that many submissions to the Review commented that financial hardship remains an issue for Aboriginal and Torres Strait Islander students succeeding at and completing university courses. Some students may not have yet benefited from the most recent reforms, some may not be aware of them and for others there may still remain issues of adequacy of income support, particularly for those with children.

What needs to change?

Ensuring ongoing access to and adequacy of Centrelink-based income support payments

The Panel notes that, notwithstanding recent reforms, Aboriginal and Torres Strait Islander students are more likely to have additional financial needs compared with non-Indigenous students due to their higher incidence of mature-age students with dependants.

The Panel wants to ensure that students are not missing out on access to appropriate levels of income support and that they are well informed about the range of options available to them. The Panel notes that while some forms of support such as ABSTUDY payments can be made direct to students, others such as compulsory tuition scholarships are paid to universities. The interaction of these payments needs to be monitored by the government to ensure that Aboriginal and Torres Strait Islander students are adequately supported throughout their studies.

The National Union of Students submission notes that the last survey of student finances was conducted before the changes flowing from the Bradley Review and the Review of Student Income Support Reforms. The National Union of Students highlighted that:

early data indicates that more Indigenous students are receiving at least some of the benefits of the Commonwealth income support reforms. DEEWR’s Annual Report mentions: ‘The number of students receiving ABSTUDY increased by 4.6 per cent between 2010 and 2011 … The increase was mainly attributable to an increase in higher education recipients after more dependent young people qualified for ABSTUDY under changes to the Parental Income Test implement on 1 July 2011’ (submission no. 31, National Union of Students, p. 6).

There are other changes from the Bradley Review still to flow through in July 2012 and it will therefore be important to review the circumstances of Aboriginal and Torres Strait Islander students once all changes are in place, as suggested by the National Union of Students. The Panel understands that Universities Australia is planning to do another student finance survey this year. The Panel also suggests that there may be options for universities to provide additional support to meet the specific needs of Aboriginal and Torres Strait Islander students through further developing creative partnerships with private sector revenue sources including philanthropy, business and others. The University of Queensland’s submission to the Review made a similar suggestion:

With government and philanthropic organizations develop scholarships that will cover the cost of fees, books/computers, and accommodation and living expenses for students with financial need (submission no. 42, University of Queensland, p. 4).

Additional bursaries, cadetships and scholarships could provide incentives for Aboriginal and Torres Strait Islander people to take up higher education and this idea is explored further in section 2.2 on the professions.

Removing existing and potential anomalies in financial support arrangements

Two anomalies within the existing financial support arrangements were drawn to the Panel’s attention through the National Union of Students submission to the Review. These anomalies are: (1) the tax treatment of ABSTUDY living allowances for postgraduate students; and (2) the potential impact on income support payments due to the reclassification by some universities of their law courses to postgraduate levels. Both issues were also raised by the Indigenous Higher Education Advisory Council in earlier tax and income support reviews.

In the first case, the issue is that the living allowance rate for ABSTUDY living allowance recipients is treated as taxable income while the Australian Postgraduate Awards (APAs) awarded to HDR students are treated as exempt income under section 51-10 of the Income Tax Assessment Act 1997. This is in recognition that ABSTUDY living allowance is an income support payment and an APA is a competitive merit-based scholarship.

The Panel notes that ABSTUDY postgraduate award recipients are entitled to a range of tax-free supplementary benefits that are not available to APA recipients including: Relocation Scholarships, Student Start-up Scholarships, Incidentals Allowance, Away-from-Base assistance and payment of their student contributions ( HECS-HELP) or tuition fees. ABSTUDY recipients may also be eligible for Crisis Payment, Bereavement Allowance and Advance Payment.

Australia’s future tax system – report to the Treasurer recommended that income support and supplementary payments should be tax exempt, noting that government payments that are similar in nature to income support, such as scholarships, should be exempt from tax to align their treatment with that of income support. The report notes that one of the main objectives of cash transfer payments is to increase poor households’ real income, and taxing transfer payments can interfere with this objective. It notes further that taxing transfer payments also complicates individuals’ interaction with the tax and transfer systems (Australian Treasury 2010).

The Panel recommends that the government further consider Recommendation 4 from Australia’s future tax system – report to the Treasurer in relation to ABSTUDY and APAs.

In the second case, the National Union of Students has highlighted to the Panel that the reclassification of law courses at the University of Melbourne and the Australian National University from Bachelor of Law courses to Juris Doctor courses may lead to potentially negative income support consequences including diminished eligibility for income support, diminished access to ITAS-TT tutoring programs and loss of or reduced access to alternative entry programs (submission no. 31, National Union of Students, p. 5).

All university masters degrees and doctoral courses are approved courses for ABSTUDY. Both Juris Doctor courses from the University of Melbourne and the Australian National University are approved courses for the payment of mainstream student income support payments of Youth Allowance and Austudy, meaning that eligible students may currently undertake these courses and qualify for assistance. In addition, from 1 January 2014, mainstream student income support will be extended to all eligible students undertaking masters degrees by coursework.

Some of these impacts may apply to all students, while diminished access to ITAS-TT and alternative entry programs will impact most heavily on Aboriginal and Torres Strait Islander students. Given that other universities may adopt a similar approach in the future, as suggested by the Indigenous Higher Education Advisory Council, the Panel recommends that the government ensure that Aboriginal and Torres Strait Islander students and other students undertaking these courses do not suffer reduced support.

3.6.2 Commonwealth scholarships

Current situation

The Commonwealth Scholarships Program is made up of five different scholarships all aimed at improving access to, and participation in, higher education for Aboriginal and Torres Strait Islander students from low SES backgrounds and from regional and remote areas.

  • Indigenous Commonwealth Education Costs Scholarships provide annual funding ($2,290 per student in 2011) to assist undergraduate students with general education costs for up to eight semesters.
  • Indigenous Enabling Commonwealth Education Costs Scholarships provide annual funding ($2,290 per student in 2011) to assist eligible enabling course students with general education costs for up to two semesters.
  • Indigenous Commonwealth Accommodation Scholarships provide annual funding ($4,580 per student in 2011) to assist undergraduate students from regional and remote areas (who need to move away from home to commence higher education) with accommodation costs.
  • Indigenous Enabling Commonwealth Accommodation Scholarships provide annual funding ($4,580 per student in 2011) to assist enabling course students from regional and remote areas who need to move away from home to commence higher education with accommodation costs for up to two semesters.
  • Indigenous Access Scholarships provide a one-off payment ($4,321 per student in 2011) to assist commencing students to undertake an eligible enabling course or undergraduate course.

The first four scholarship types listed above provide students with financial assistance with education costs and accommodation costs if they are enrolled in enabling courses, undergraduate courses (not limited to areas of national priority) or postgraduate courses (in an area of national priority required for initial registration to practice in the chosen priority area). These scholarships interact directly with the student income support system administered by Centrelink. Indigenous Access Scholarships are not systematically connected to the student income support system.

Program data suggests that in 2010 there was a significant level of variability in take-up rates across institutions. Using the Indigenous Commonwealth Education Costs Scholarships as an example, 16 institutions awarded their full allocation or more, another six institutions awarded close to their full allocation and the remainder awarded below their allocation ( DEEWR 2011o, pp. 7–9).

Although the situation varies between universities, and despite a growing number of Indigenous-specific scholarships, bursaries and grants designed to relieve financial burdens of Indigenous students, a worryingly large number of scholarships remain untaken. The conflicting deadlines and modes of distribution of various sources of funding and dissonance between the scholarships and actual students’ needs are among explanations of this discrepancy (Pechenkina & Anderson 2011, p. 11, citing James & Devlin 2006).

Universities and government may wish to further explore the incidence of low take-up of scholarships and consider options for increasing it, including supporting better access to information on them. In this context, the Panel welcomes the recent initiative of the Aurora Project to provide consolidated information to students on the full range of scholarship programs (Aurora Project 2011a).

What needs to change?

Simplifying the Commonwealth Scholarships Program

The Panel believes that simplifying the existing range of scholarships and consolidating them into one program may also help more students to access them. RMIT University suggested that:

An important driver of access [to higher education] is students’ financial security, and we consider that current Commonwealth scholarship arrangements could be simplified to improve this (submission no. 67, RMIT University, p. 1).

The Panel proposes that the existing funding allocations for each of the above five categories of scholarships be rolled into one new Indigenous Access Scheme. It could be renamed from scholarship to program as the Panel heard some anecdotal evidence during consultations that some students do not apply for a scholarship because they think that they are not ‘smart enough’ to win a scholarship. Referring to it as a payment might avoid this issue.

The new scheme would be developed in accordance with the funding principles outlined earlier in the report to apply to all Aboriginal and Torres Strait Islander–specific funding, including strong accountability mechanisms for universities to ensure a transparent and accountable process for awarding of payments/scholarships to Aboriginal and Torres Strait Islander students. At the same time, greater flexibility would allow universities to tailor the scholarships to better meet the needs of the students, which may also increase take-up rates.

Recommendation

Recommendation 17

That the Australian Government and universities, in consultation with Aboriginal and Torres Strait Islander student representatives:

  • examine any outstanding issues regarding government income support payments for Aboriginal and Torres Strait Islander students, including issues relating to ABSTUDY, Australian Postgraduate Awards and income support for students undertaking postgraduate degrees that were formerly undergraduate degrees, focusing on the needs of students with children, and explore opportunities to partner with philanthropic and private sector organisations to provide additional income support for students
  • amalgamate existing Commonwealth scholarships for Aboriginal and Torres Strait Islander students into one program based on the overarching reforms outlined in Recommendation 13.