Home > Economic policy > Stop subsidising for-profit education

Stop subsidising for-profit education

April 12th, 2015

Among the many failures in the education ‘reform’ movement, the attempt to promote for-profit education has been the most complete. The Swedish experiment, for quite a few years seen as the exemplar of success, has turned out very badly.

In the US, the for-profit schools company Edison failed completely. Far worse for-profit universities like Phoenix, which have prospered by recruiting poor students, eligible for Federal Pell Grants, and enrolling them in degree programs they never finish. Phoenix collects the US government cash, while the students are lumbered with debts they can never repay and can’t even discharge in bankruptcy.

Several years ago, there was a major scandal in Victoria (which led the way in privatising vocational education) about similar practices.

This did not, of course, lead to any change for the better. Instead, governments across Australia followed the Victorian model. For-profit providers responded by emulating the University of Phoenix, with recruiters offering free laptops to anyone will to sign up for a course and the associated debts: the targeted groups were low-income earners who would not have to repay the income contingent loan except in the unlikely event that the course propelled them into the middle class.

This isn’t just a matter of fringe players: a report on A Current Affair[1] identified some of the biggest for-profit firms, such as Evocca, Careers Australia and Aspire. The Australian Skills Quality Authority is supposedly investigating. However, as with the authorities that are supposed to regulate greyhound racing, the obvious question is why, when these rorts have been common knowledge for years, a current affairs show can find the evidence ASQA has apparently missed.

It’s clear enough that privatisating VET-TAFE has been a failure, as would be expected based on international experience. But the answer isn’t to go back to the past. Rather, we need a national framework for post-school education, with funding both for TAFE and universities on an integrated basis.

There’s still the problem of how to wind down the for-profit system. I’d suggest that we could start by converting the better ones into contract providers of TAFE courses, and then gradually absorbing them into a unified system.

Those who don’t like that deal could compete like good capitalists in the open market, charging upfront fees and serving whatever market they could find, subject to ordinary consumer protection laws.

fn1. Presumably reflecting a change in the audience, A Current Affair has started targeting large-scale corporate wrongdoing rather than going solely after the easy target of dodgy tradespeople and low-grade con artists. Unfortunately, the story was spoiled by an apparently irrelevant attempt to drag in the Mormon affiliations of some of those involved in the basis, but you can’t have everything.

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  1. Ikonoclast
    April 12th, 2015 at 18:59 | #1

    Ah, late stage neocon capitalism! It’s making such a good job of everything isn’t it?

    Sarcasm alert: The above is pure sarcasm of course.

  2. R Barlow
    April 12th, 2015 at 19:08 | #2

    There is a growing scandal around the training industry which some of our politicians should latch on to. Mums, dads and kids are being burdened with debts to pay for courses that are useless. They are useless because the training is substandard, Government knows this, their own agency says 70% of the very small sample of courses they tested had significant problems. There are numerous examples of Phoenix type operations where the training provider gets the loan from Government which they then tick and flick their trainees and saddle them with the debts.

    I heard one senior bureaucrat extol the virtues of the newly increased TAFE fees for aged care on the basis that most would not have to pay it back because they would never earn more than $50, 000 pa. What a career pitch!

  3. Robertito
    April 12th, 2015 at 19:20 | #3

    When I studied education at post graduate level over a decade ago, one of my lecturers introduced a reading by saying, “this article is about the crisis in education, but bear in mind that education is always in crisis.” One of the consequences of this constant popular notion of a system in crisis is that it attracts and allows ideological meddling, whereas education is much more suited to management by a Yes Minister style benevolent public service. Of course after so many years of meddling, we may actually need reform now.

  4. bjb
    April 12th, 2015 at 19:31 | #4

    JQ – “Presumably reflecting a change in the audience, A Current Affair …”

    I’d say it’s more the change in ownership. When the Packer’s owned Ch9, they were part of the business establishment, so much easier to beat up on the little guys – people who don’t matter. Now CH9 is owned by the Vulture Capitalists, who would sell their grandmother to make a dollar, the reporters at ACA may have been let of the leash, as I doubt the VC guys give a rats who they upset, so long as they make money.

  5. Donald Oats
    April 12th, 2015 at 20:57 | #5

    A number of people thought the initial HECS fees when the Dawkins reforms kicked in would be a disincentive to students; for a while, I was thinking that could be the case. Once it took off, the deviousness of the deferred repayment and its simple ingeniousness became clear: students cared in the abstract—they would rather have free education—but the delay in first repayment was sufficient to put it out of their minds while studying. Those paying upfront probably had a different view.

    While considerable thought went into the extorting of money from the students, and into the deregulation of the tertiary sector, far less thought went into monitoring and enforcing quality of service and product, for that would have cost the government directly. Perhaps the government could have charged a premium from each education provider, and if one of them doesn’t perform, the premiums cover the compensation payments to the students who copped a cr*p product, and the premiums rise accordingly. At some point the market participants might then think about policing each other…(and pigs will fly)

    Now that deferred payment HECs is locked in, I don’t see any easy way for a government to restructure the whole post-secondary education system to be more responsive to need, especially for those of us falling into the 50-plus category of the surplus-to-needs.

  6. Megan
    April 12th, 2015 at 21:57 | #6

    …the answer isn’t to go back to the past.

    I come across this sentiment in other areas of concern as well, and I don’t get it.

    I say “why not?”

    If you get lost and you retrace your footsteps until you are back on track, that is considered sensible common sense. Why not go back to, for example, fully state funded tertiary and TAFE education?

  7. Ikonoclast
    April 13th, 2015 at 00:19 | #7

    @Megan

    I agree. Another one I hate is “You can’t unscramble the eggs now.” Many years ago a Liberal minister actually said this gloatingly about Howard’s welfare “reforms”.

    My answer is “bull”. The people get another batch of eggs and make something different… even if necessary go back to a previous system that was better.

    All these statements surrounding necon ideological changes attempt to indoctrinate people into believing TINA (There Is No Alternative). There is always an alternative.

    We should indeed go back to fully funded tertiary education. It is bulldust that we can’t afford it. Of course we can. They always say the coffers are bare but when it’s time for war or dumping refugees in the Pacific gulags then they suddenly find billions of extra dollars out of nowhere.

  8. John Quiggin
    April 13th, 2015 at 06:08 | #8

    @Megan

    By “state” do you mean “state government”, or “government”? On the first point, the old system in which states ran TAFE and the Feds ran unis was no basis for a universal system of post-schools education.

    If you mean “government” and are referring to “free education”, it has never existed at the post-school level in Australia. TAFE always had fees, and universities had limited access. Neither was free.

    So, there is no good past model to return to.

  9. Hermit
    April 13th, 2015 at 08:07 | #9

    Permanent retraining being half of ‘earning or learning’ makes the unemployment figures look good. In the US ten military bases will be used to train 75,000 people mainly ex armed forces in solar panel installation. Link. What if that market shrinks as it has done in Australia?

    Conceivably the day will come when the typical dole recipient has multiple diplomas. Tickets in hair dressing, diesel engine maintenance and first aid. Paid work experience none.

  10. Ikonoclast
    April 13th, 2015 at 08:15 | #10

    @John Quiggin

    Your statement “there is no good past model to return to” is incorrect in the sense that there is a past model to turn to that was better than the current model.

    According to The Converstation online (“Should we follow the German way of free higher education?” – by Tim Pitman and Hannah Forsythe;

    “Serious attempts to support poorer students into university began in 1944 with the Commonwealth Reconstruction Training Scheme. As well as ensuring people had jobs in the post-war economy, it was a deliberate social engineering attempt by the Curtin-Chifley government to encourage people from working-class backgrounds – mostly men – to study.

    Prime minister Robert Menzies expanded the system into the merit-based Commonwealth Scholarships scheme. Between this and state-based teachers’ scholarships, a majority of university students from the late 1950s to the early 1970s did not pay fees. However, the overall student demographic remained urban, middle class and white.

    When Whitlam made education free in 1973, it still didn’t help many more students from more diverse families go to university, though mature-age women did benefit. The practical difference under Whitlam was offering income support for students.”

    Let us recap the key statements or claims above;

    (1) Due to scholarships a majority of university students from the late 1950s to the early 1970s did not pay fees.

    (2) Whitlam made tertiary education free in 1973 and offered income support for students.

    This is better than the current system from an equity point of view. I am not sure about number of places available relative to population; whether that was better then or now.

    The same article mentioned above states;

    “Eight of the 22 countries analysed (selected based on whether sufficient data is available) provide free higher education. Their governments invest on average $14,387 per student per year, compared to an average of $13,094 for all countries. On average, 30% of their population has a tertiary qualification, compared to 32% for all countries analysed. These countries provide free higher education for their citizens without making it too exclusive, nor dramatically increasing public expenditure.”

    The relevant table in the article is well worth looking at for the countries that do provide free tertiary education. There are little ones like Norway and poor ones like Poland and Mexico. For Australia and any Australian academics to claim we have not and cannot offer free tertiary education is at least a partial misreading of our history and an economically blinkered and fundamentally incorrect view ideologically biased to the neocon position.

  11. pablo
    April 13th, 2015 at 09:12 | #11

    When one of these ‘colleges’ set up their spruikers outside the local Centrelink office I was reminded of the beginnings of the GFC where profits were made slicing and dicing futures, derivatives, collaterised debt obligations initially from poor aspiring home owners. Substitute a 17 year old school leaver with no idea what trade or skill might appease that inner yearning but would tick a box with the ‘people inside’.

  12. Ikonoclast
    April 13th, 2015 at 09:39 | #12

    @pablo

    Yes, capitalism (particularly as financial capital) has reached its final catabolic cannibilising phase where it feeds on its own young and its decaying infrastructure. The young are exploited and cast aside. Everything public is broken up for private profit and run without proper maintenance. Fed off, sold off, broken up and cast aside as ruins.

  13. John Quiggin
    April 13th, 2015 at 09:52 | #13

    @Ikonoclast

    To repeat. ‘ Free’ education was confined to a small minority, mostly from private schools, which gave better exam preparation. The majority of potential students were excluded because the number of places was strictly limited.

    If you like the system of free education for some, you should be supporting the Go8 deregulation plans, which would reintroduce free education by expanding the number of scholarships, and would further reduce the number of students forced/allowed to pay fees by letting fewer people in.

    The Go8 plan would move us back to the pre-Whitlam system which you regard as superior to the present.

  14. Ikonoclast
    April 13th, 2015 at 10:30 | #14

    @John Quiggin

    This is patently not true. I and my brothers recieved government scholarships and tertiary education. I also received TEAS at a later stage. We came from a state high school (not THE Brisbane State High) and a working class family which eventually moved up to middle class over time. Virtually all of my peers (about 25 in my class alone IIRC) who matriculated grade 12 took university places. They were a mix of Housing Commission working class and middle class teens. I don’t see how you can say that this is limited and not free (of fees at least). It was limited only by intellectual “merit” (actually luck in good intelligence genes, good basic nutrition and good parental support) so far as I can see. If one was smart enough, one studied enough and one had parental support (even working class parents) one got into Uni and got a scholarship.

    All this was done in both the pre-Whitlam and Whitlam era without saddling students with big HECs debts before they even enter the workforce. It is the most inquitous thing to saddle people with debts before they even start work. It’s pure neocon b a s t a r d r y. The notion that Australia cannot support free tertiary education is absolute nonsense. I am not saying the system of the earlier era was the ideal. I am saying we can do even better than that and EASILY afford free tertiary education for all who can meet reasonably stringent academic entrance requirements. Academic suitability must be the sole criterion.

    It’s a matter of will and priorites. If we stopped making unecessary war, stopped subsidising fossil fuels, stopped corporate welfare, stopped negative gearing, stopped tax avoidance and started taxing the very well off properly we could easily do it. Those measures I mention could alone save $20 billion to $30 billion in the budget.

    I must say it is actually unclear what you are in favour of but it seems you support the iniquitous necon HECs system. Correct me if I am wrong in assuming this.

  15. John Quiggin
    April 13th, 2015 at 10:48 | #15

    Easy to check that your recollections are unrepresentative. The number of higher ed students in 1973 (in the middle of the baby boom cohort) was 221 000. The number of domestic students today is 905 000. Population hasn’t even doubled in that time. So, it’s obvious that vast numbers of students capable of benefiting from higher ed didn’t get it. If everyone at your working class school got into uni, it must have been a very unusual school.

    The post war period, which you see as better than the present, was even more restrictive. In the mid-50s, there were only 30 000 uni places Australia wide, less than a single university today.

    I haven’t got time to demonstrate the domination by private school kids, but your own source states it (middle class being a euphemism for “upper income” in this context).

    So, yes, if the choice is between HECS and free education for a lucky handful, I’m for HECS. If we are talking utopia (which I do regularly), I have different ideas, which I will post on another time.

    Source: https://education.gov.au/selected-higher-education-statistics-time-series-data-and-publications

  16. April 13th, 2015 at 11:09 | #16

    Of course we do have a vast private education system at the high school level. It is completely (but I could be mistaken) not for profit. None the less, it could still be a disaster. What saves it from this is parental engagement, and that the ultimate measure of its success is a set of external exams.

    The government may not want to provide the actual education services, but I think it has an obligation to provide high quality external exams. If the system is working well, these could be once a year. And the government funding for the private institution would be related to the number of their students who were successful in the exams. If your student fails the exam, you get no government money for them, and you don’t get their money either.

    Note that this would need to apply to TAFE as well, and therefore by necessity include practical exams.

    I don’t know if we want to go down that path, but it would require a big effort from government, because government would have to write the curriculum if they were to assess it. And writing and maintaining curricula and setting and administering exams is hard work. In the end, if government is prepared to do this, they may as well deliver the courses themselves, which would cut out most private providers.

  17. J-D
    April 13th, 2015 at 12:01 | #17

    If everyone at your working class school got into uni, it must have been a very unusual school.

    Ah, but the statement was not that everybody at the school got into university.

    Virtually all of my peers (about 25 in my class alone IIRC) who matriculated grade 12 took university places.

    The statement was that all (or ‘virtually’ all) of those who completed Year 12 got into university.

    The rate of retention to the end of secondary education has more than doubled. In the pre-Whitlam era less than one-third of all school students completed secondary education. Now, the rate is well over two-thirds. So like is not being compared with like. Other things being equal, providing university education for everybody who completes secondary education now would cost the equivalent of well over twice as much as it would have done in the pre-Whitlam era.

  18. John Quiggin
    April 13th, 2015 at 12:09 | #18

    @J-D

    Correct. But the same is true of the proportion going on from Year 12 to Uni. It’s only around 60 per cent now, and the numbers imply it must have been lower still in the 70s. Since it’s always been near 100 for the top private schools, and shows the usual social class gradient in state schools, a continuation rate of or near 100 per cent for a working class school remains exceptional. At my very middle class school, in Canberra, it was much below that.

  19. jt
    April 13th, 2015 at 13:05 | #19

    @Ikonoclast

    It was limited only by intellectual “merit”…

    Well then how did you get in? But more seriously, I don’t see why tertiary education should be free given the advantage you get in lifetime earnings. The cost shouldn’t be oppressive either. I too went to uni from a poor white trash (I love that American expression) upbringing, but I chopped and changed courses 4 times before I finally stuck at something. This happened just before and after the introduction of TEAS/HECS. Having to pay a fee stops people from mucking about at the taxpayers expense, which is what I did.

    This point of view may not be popular, but I think we probably have far too many people being trained in jobs that are already oversupplied. I wish I had a dollar for every lawyer, teacher, arts, humanities and social sciences graduate who is an office pen pusher. I’d be surprised if we couldn’t tank 50,000 or so university places like this with no negative economic impact.

    On the other hand, being a techno-optimist, I would like to see a massive increase in science funding and a quadrupling or quintupling of the CSIRO budget. I want to see Australia be in the vanguard of bringing on the post-scarcity world that I now think is within reach, thanks to the likely tripling or quadrupling of solar efficiency at reduced cost that now appears to be in the pipeline.

  20. April 13th, 2015 at 14:05 | #20

    Once upon a time, most kids left school at 14. By the 70’s, most stayed to 17. Its now reached the point where its not so much that you get extra income by being a uni graduate, but rather that you are disadvantaged by not being one.

    Just about everyone needs some form of further education after high school, so it should be free.

  21. Ivor
    April 13th, 2015 at 14:30 | #21

    @J-D

    What is the evidence for:

    In the pre-Whitlam era less than one-third of all school students completed secondary education.

    I understand that Australia had compulsory education until aged 15.

  22. Donald Oats
    April 13th, 2015 at 14:32 | #22

    @John Brookes
    You beat me to it. My father followed the standard high school to job to management career trajectory available up to the lat 1960’s. I entered the job market with matriculation at the end of 1982, confronting over 10% unemployment and a massive youth unemployment. I had the good fortune to be able to study at university, thus avoiding that recession, only to finish when we had the great ’87 stock market crash. Some friends continued on with grad dips, only to hit the ’90/91 recession “we had to have”.

    For my father, jobs followed a natural progression—until the 80’s downsizing and the 90’s transformations. He was fortunate enough to pick his retirement, more or less. It isn’t like that now. The nature of work is transforming before our very eyes, so it requires post-secondary education which can keep up with the changes, unless we want people to be permanently unemployed at earlier and earlier career points. If we are serious about keeping people in the workforce beyond 65 years of age, then at least two things must change: first, employers must resist the urge to chuck the over 45’s under the bus when the next recession or down-sizing fad washes through; second, repeated access to post-secondary education must be possible, for the jobs available in the next decade may be significantly different to those available now.

    A robotic automation of a factory means very few staff are necessary to do what once took hundreds, even thousands, of people to accomplish. 3D (additive) printing technology allows not only rapid prototyping of a new design, but fully individualised designs, which turns the whole mass production paradigm on its head. Depending on the product to be manufactured, even the customisation can be automated. CSIRO has done some amazing things in this space, as have others.

    Given how many people access post-secondary education, it is reasonable to ask how do we pay for a model which is designed to admit repeated access during a long working life? If you saw any of the tax minimisation senate committee testimonies from the big ITC companies, you might reasonably wonder if corporations in Australia should be shouldering a greater burden of it, being the biggest beneficiaries of an educated workforce. Why is it the PAYG who cop the debt and the taxes to pay for it, and the corporations are siphoning taxable profits out of the country?

  23. Ivor
    April 13th, 2015 at 14:33 | #23

    @John Brookes

    How does “most stayed to 17” fit in with “less than one-third completed”.

  24. Jim Birch
    April 13th, 2015 at 14:58 | #24

    Not quite on topic, but John Menadue blogs that Australia now has the second lowest spend GDP-wise of 34 OECD countries. Just over a third of of the highest spender, Finland.

    http://johnmenadue.com/blog/?p=3479

  25. rsp
    April 13th, 2015 at 15:01 | #25

    This analysis holds good for early childhood EDUCATION and care (ECEC). A Canadian study on the balance sheet for corporate child care providers found that the only way to ensure the expected level of returns to shareholders was to cut quality. The research on early brain development shows how sensitive young children’s brains are to the degree of enrichment and responsiveness in their environment. High quality, affordable ECEC can only be provided by not-for profits, and public provision has advantages that even the OECD (not known for fulsome support for a larger public sector) has recognised.

  26. Alan Hunter
    April 13th, 2015 at 15:19 | #26

    Now that’s weird, in the 50’s at a rural State School (Vic), we were unaware that universities even existed or that we could attend, not one of the kids I went to school with went past year 10. Our parents and teachers never had any ambitions for us other than being a tradesman or farmer, nurse or teacher for girls.

  27. Ikonoclast
    April 13th, 2015 at 15:25 | #27

    @John Quiggin

    My post made it clear that my choice was not between HECS and free education for a lucky handful. My post made it clear I was for free tertiary education for all who meet the standards. There is no problem (IMO) with making the standards rigorous enough that graduates will meet requirement. I know future requirements for doctors, engineers, teachers etc., can be difficult to predict. However, it must be possible to make estimates and to use some sort of “supply theory” to determine what level of potential over-supply of the qualified is most tolerable. I make the assmuption here that under-supply is always more economically damaging than moderate over-supply.

    My post made it clear that there are many other “sectors” (war, fossil fuel subsidies, corporate welfare, tolerance of tax minimisation) where we waste or forego money and resources shamefully and that these resources could be put into education.

    Of course, my tertiary student era (and yours) are not directly comparable to contemporary Australia. Contemporary Australia is indeed richer and more developed. It is not as if HECs was the necessary and only possible way of funding tertiary education. I’ve already pointed out the ways we waste immense money and resources on less necessary things.

    A first degree, even of 4 or 6 years (like engineeering or edicine respectively), should be free. Entrance should be based on academic qualifications alone. Quotas should apply (related to our projected need for professionals) to degrees leading directly to professional employment. Other degrees of a more “humanties” or generalist nature need not be quite so strictly quota limtied. It should be recognised that becoming more learned for its own sake is also a worthwhile goal. Second degrees though should probably be user pays.

  28. jt
    April 13th, 2015 at 15:42 | #28

    There is no such thing as a free lunch. Either you pay for university as a fee, in higher taxes as you earn more or someone without the advantage of a tertiary education has to pick up your tab.

  29. Donald Oats
    April 13th, 2015 at 16:10 | #29

    The current highly distorted post-secondary education system pays a few individuals enormous sums of money to set up, run, collapse, and to run away to try again. Meanwhile, students are left in the lurch and carrying a debt.

    Furthermore, enterprises are applying “time limits” to our investment in our education: I was looking through jobs boards and for many jobs, they specify that the applicant’s degree must have been completed no more than X years ago, X being from 7 to 10 years. In other words, the degree was considered out of date and useless for the job if it was completed more than seven (ten) years ago. For an investment of $60K or much more, it would be nice for it to hold its value better than that!

  30. David Irving (no relation)
    April 13th, 2015 at 16:15 | #30

    @jt
    Yes, it costs. I have no problem with a redistributive tax system (like we used to have) that ensures we can afford it.

  31. J-D
    April 13th, 2015 at 16:25 | #31

    @Ivor

    John Quiggin has asked that any interaction between us should go the Sandpit, so I’ll respond to you there.

  32. J-D
    April 13th, 2015 at 16:32 | #32

    A graph of changes in the rate of retention to the end of secondary education from 1967 to 2002 is Figure 1 in the article that can be found at this URL:
    http://www.curriculum.edu.au/verve/_resources/studentretention_main_file.pdf

    The steep rise is between 1982 and 1992.

  33. Uncle Milton
    April 13th, 2015 at 16:59 | #33

    enrolling them in degree programs they never finish.

    Is that because Phoenix provides a poor quality education or because the kinds of students it attracts are poorly prepared for university education?

  34. John Quiggin
    April 13th, 2015 at 20:01 | #34

    @Ikonoclast

    Let’s take this to the sandpit

  35. John Quiggin
    April 13th, 2015 at 20:02 | #35

    @Uncle Milton

    Both, but I think the selection of poorly prepared students is part of the plan. More able students would cause more trouble when they realised they were being ripped off.

  36. Ivor
    April 13th, 2015 at 20:10 | #36

    Before Whitlam – staying on to year 12 was a different matter to completing.

    Students completed with different certificates in different states at the end of what is now year 10.

    This was completion of secondary education.

    In 1967, the two senior years probably did not exist or were pretty new and not heavily utilised.

  37. J-D
    April 13th, 2015 at 20:34 | #37

    Reliable official information about how many years the high school course covered in New South Wales at different historical periods can be found here:

    http://www.governmentschools.det.nsw.edu.au/facts/division.shtm

    Reliable official information about examinations and certificates at different stages of high school in New South Wales at different historical periods can be found here:

    http://www.governmentschools.det.nsw.edu.au/examinations.shtm

  38. Ivor
    April 13th, 2015 at 21:04 | #38

    Before Whitlam in 1970, 74% completed to year 10.

    In 1965 64% completed to year 10.

    http://www.governmentschools.det.nsw.edu.au/files/enrol_per_year_7.pdf

  39. Ivor
    April 13th, 2015 at 21:07 | #39

    Before Whitlam – at least in NSW, there was the old system, where students did their “leaving certificate” at then high school year 4.

    See chart at: http://www.governmentschools.det.nsw.edu.au/story/reform_movement.shtm

    There was also an Intermediate certificate. Presumably another exit point.

  40. Ivor
    April 13th, 2015 at 21:23 | #40

    Before Whitlam, in Queensland, in 1960:

    … almost 80 per cent of 14-year-olds were remaining at school of their own volition, so that it could be said that the Watkin Committee’s recommendation in 1961 that the leaving age be raised to 15 sought to recognise a fait accompli.

    see: http://education.qld.gov.au/library/edhistory/state/brief/secondary-1957.html

    There is no evidence that in the pre-Whitlam era, less than one-third of all school students completed secondary education.

    There may be evidence that before Whitlam, less than a third of all school students matriculated to university – but this is entirely different.

  41. J-D
    April 13th, 2015 at 22:39 | #41

    In New South Wales since the 1960s on, secondary education has consisted of six years of schooling. Until recently, the School Certificate was available to students who had completed four of those six years, while the Higher School Certificate was and still is available to students who have completed all six years of secondary education. Receiving the School Certificate did not mean a student had completed the full course of secondary education and it was not a university entrance qualification, which the Higher School Certificate is.

    Before 1982, less than one-third of all secondary students completed the full course of secondary education (six years in some States and five years in others). Since 1992, over two-thirds of all secondary students have completed the full course of secondary education. At all times some students have left secondary education without completing it, and some of them (depending on how much secondary education they have completed) have been eligible to receive qualifications like the School Certificate and its predecessor the Intermediate Certificate (in New South Wales; I don’t have the full list of all States’ titles).

    I posted a comment with links to official sources with full historical detail (for New South Wales again) but it had two links and so is still in moderation.

  42. Ivor
    April 14th, 2015 at 00:56 | #42

    @J-D

    In New South Wales since the 1960’s on, secondary education has not consisted of six years of schooling.

    It consisted, for most students, of four years when they completed their education with a so-called “leaving certificate” or “school certificate”. They then usually entered the workforce having successfully completed their secondary education.

    For others, it consisted of 5 years for matriculation, or other training, and after 1970, for six years for the Higher School Certificate.

    Those who did not proceed beyond the leaving certificate completed their secondary education from (what was then) – fourth form.

    Before 1970, those who continued, completed their secondary education after 5 years.

    After 1970, those who continued, completed their secondary education after 6 years.

    Based on the data, in 1965, 31% of students continued into year 5. Therefore around 70% completed their secondary education earlier.

    So it is clear – Receiving the school certificate meant that most students had completed their secondary education. According to the data, only a minority continued.

    Entering university was not relevant. Before Whitlam, university was only for scholarship, traineeship or cadetship holders and for the rich.

    The actual proportions and the different years of study for sample years are here:

    http://www.governmentschools.det.nsw.edu.au/files/enrol_per_year_7.pdf

    nets

  43. Ivor
    April 14th, 2015 at 00:57 | #43

    In New South Wales since the 1960’s on, secondary education has not consisted of six years of schooling.

    It consisted, for most students, of four years when they completed their education with a so-called “leaving certificate” or “school certificate”. They then usually entered the workforce having successfully completed their secondary education.

    For others, it consisted of 5 years for matriculation, or other training, and after 1970, for six years for the Higher School Certificate.

    Those who did not proceed beyond the leaving certificate completed their secondary education from (what was then) – fourth form.

    Before 1970, those who continued, completed their secondary education after 5 years.

    After 1970, those who continued, completed their secondary education after 6 years.

    Based on the data, in 1965, 31% of students continued into year 5. Therefore around 70% completed their secondary education earlier.

    So it is clear – Receiving the school certificate meant that most students had completed their secondary education. According to the data, only a minority continued.

    Entering university was not relevant. Before Whitlam, university was only for scholarship, traineeship or cadetship holders and for the rich.

    The actual proportions and the different years of study for sample years are here:

    http://www.governmentschools.det.nsw.edu.au/files/enrol_per_year_7.pdf

    nets

  44. J-D
    April 14th, 2015 at 08:10 | #44

    Before 1982, well under one-third of all school students completed the highest level secondary qualification (however named; in New South Wales, the Higher School Certificate). Since 1992 well over two-thirds of all school students have completed the highest level secondary qualification.

    The rate of apparent retention from the first year of high school to the end of Year 12 has been reported by the Australian Bureau of Statistics in its publication Schools Australia to create a consistent time series going back to the 1960s, and that’s the source for the graph in the publication I cited earlier.

  45. J-D
    April 14th, 2015 at 08:11 | #45

    @Ivor

    Again, I shall reply to you in the Sandpit.

  46. Uncle Milton
    April 14th, 2015 at 09:36 | #46

    @John Quiggin

    If the product is so terrible, why do they keep getting more customers (students)?

  47. Ivor
    April 14th, 2015 at 09:45 | #47

    @Uncle Milton

    On various TV current affairs programs i have seen complaints from many overseas students about being ripped-off by capitalist education providers.

    Is this what you meant by terrible product?

    Some private schools are treaching that Jesus, God or Allah dictates how you should live, who you can marry, what clothes you can wear, jobs you can have and what food you can eat.

    Is this what you meant by terrible product?

    Religious pressure can force many children into terrible education.

  48. Uncle Milton
    April 14th, 2015 at 10:17 | #48

    @Ivor

    What I mean is that students at the University of Phoenix are going into big debt to pay for a poor-quality university education. A lot of them don’t complete their degrees. You don’t get half the benefits of a university degree (in terms of better job and earnings prospects) by completing half a degree. When you don’t finish, you don’t get any of the benefits, and these students are stuck with the debt as well. (In America, student debt isn’t like HECS. You’ve got to pay it off no matter how low your income is.)

    That’s what I mean by a terrible product.

    If anybody tried to sell uninsurable expensive cars with no warranty that regularly broke down on the drive home from the showroom they’d go out of the business very quickly. The market would work quickly and brutally. But for some reason this market discipline doesn’t seem to work with poor quality for-profit higher education.

  49. Ivor
    April 14th, 2015 at 10:23 | #49

    @Uncle Milton

    OK

    Maybe a Giffin good effect, or

    maybe people purchasing private education are in fact buying something else as well.

  50. April 14th, 2015 at 11:32 | #50

    @Uncle Milton

    Because they don’t have to pay up front. Because it is the triumph of hope over reality. Because if they were any smarter they’d have gone to a proper university. Because people really believe the mantra that if you try hard enough you can do/be anything. Because the inheritance thing from Nigeria didn’t work out…

  51. Ikonoclast
    April 14th, 2015 at 12:00 | #51

    As J.Q. essentially said in the original post, free market “for-profit” education does not work. It’s a judgment which I thankfully can agree with despite our other differences in this debate.

    The reasons why it doesn’t work must be complex and interesting and would shed considerable light on the whole subject of the limitations of free markets. Like the free market’s failure to deal with negative externalities it’s another example of market failure. Apart from the whole “privatise the profits, socialise the losses” strategem it must be something to do with incorrect time discounting (if that’s the correct phrase) not to mention imperfect information and plain old deception.

  52. Ernestine Gross
    April 14th, 2015 at 12:58 | #52

    @J-D

    I found your references at 32 and at 37 useful. Thank you.

  53. April 14th, 2015 at 13:56 | #53

    And J-D, you have refreshed my memory of high school. I’d forgotten just how many students vanished during and at the end of year 10. I guess they were kids I usually had nothing to do with, while most of the kids I actually knew went on to year 11 and 12.

    One thing I remember about high school is that all the children of a fairly high powered public servant went to it, even though it was a government school. It is hard to imagine such a thing happening today, although I’m sure there must be a few who still put their faith in the government system despite having the money to go private.

  54. John Quiggin
    April 14th, 2015 at 14:14 | #54

    @Uncle Milton

    It’s worth observing that the alternative, entering the US workforce with a high school education, is also appalling. Real wages lower than in the 1970s, if you can get work at all.

  55. Uncle Milton
    April 14th, 2015 at 14:30 | #55

    @John Quiggin

    What’s the expected payoff for someone who enrols at the University of Phoenix and others of its ilk, taking into account cost of the degree, debt interest, likelihood of finishing, time to finish, and earnings premium paid to graduates of those august institutes of the higher learning?

    I’d sooner take my chances and try and find a job in a paint factory.

  56. John Quiggin
    April 14th, 2015 at 18:41 | #56

    @Uncle Milton

    Completion rate is something like 10 per cent, and earnings premium is modest for those who do. OTOH, most of the cost is picked up by Uncle Sam. Same deal as in Oz.

  57. Peter T
    April 14th, 2015 at 21:21 | #57

    Uncle Milton

    For cars, food, entertainment, mortgages or anything else, there is reliably a segment of the population that can be sold lemons. In consequence, there are firms and people who make their varied livings off that segment (just as, in any forest, there are enough sick trees for various organisms that live off them to flourish). How big this segment is is a matter both of policy and of circumstances – it’s easier to sell scams to the desperate. Look at many Republican political sites and you will find firms selling quick cancer cures, survival kits for the end times and similar. So why not education?

  58. TerjeP
    April 15th, 2015 at 07:18 | #58

    JQ complains about “for profit” education. And then as evidence for his reasoning he shares a link about the poor management of public funds in Victoria. Is this some sort of clever joke?

  59. J-D
    April 15th, 2015 at 08:34 | #59

    @TerjeP

    No, it’s not any kind of joke. The poor management of public funds of which John Quiggin is complaining is the use of public funds to subsidise for-profit education providers. It’s even there in the title of the post, which is not ‘Stop for-profit education’ but ‘Stop subsidising for-profit education’. Is the distinction not clear to you? Or are you making an unsuccessful attempt at some sort of clever joke?

  60. John Quiggin
    April 15th, 2015 at 09:54 | #60

    @TerjeP

    What J-D said.

    And, in a point that should gladden your heart, I suggested the for-profit providers should try their chances in the open, unsubsidised market.

  61. TerjeP
    April 15th, 2015 at 10:23 | #61

    And I suggest government schools should do the same.

    But if we are going to have subsidies (eg for children) then they ought to apply to students irrespective of the financial motive of the institution they attend.

    If you want to use Sweden as a case to make your argument then rather than merely reference a hack piece of an article you should put up some data showing that the for-profit Swedish schools deliver inferior outcomes compared to their government operated counter parts. Adjusted for size of taxpayer subsidy.

  62. TerjeP
    April 15th, 2015 at 10:33 | #62

    eg. This paper looks at the data and draws quite different conclusions to you regarding Sweden.

    http://www.iea.org.uk/sites/default/files/publications/files/Schooling%20for%20money%20-%20web%20version_0.pdf

  63. J-D
    April 15th, 2015 at 10:33 | #63

    @TerjeP

    But if we are going to have subsidies (eg for children) then they ought to apply to students irrespective of the financial motive of the institution they attend.

    Why?

  64. TerjeP
    April 15th, 2015 at 11:11 | #64

    Why not?

  65. J-D
    April 15th, 2015 at 11:14 | #65

    @TerjeP

    I acknowledge your admission that your stated position (the one I quoted) is wholly unjustified.

  66. April 15th, 2015 at 12:24 | #66

    @TerjeP

    But the IEA are a free market think tank. That is, they try and promote the free market, so they would say nice things about Sweden.

    Anyway, if Swedish students sit some sort of external exam at the end of school, then the performance of schools can be easily judged, and the parents of potential students make informed decisions. This imposes a discipline on the schools which is absent in much of the for-profit education sector in Australia.

    TEQSA, as far as I know basically approves course design for courses offered in Australia, but then has very little role. It was going to have a bigger role in ongoing quality assurance, but one of the first things the Libs did on being elected was to cut back that role.

    So all a fly-by-night education provider has to do is come up with a good course design and get it approved by TEQSA, and after that take the money and provide the minimum level of service that stops their students rioting in the streets. The students, often used to not performing very well in formal education, will tend to blame themselves for their poor performance, not even realising that their institution is providing a rubbish service.

  67. John Quiggin
    April 15th, 2015 at 15:11 | #67

    @Terje
    Not only is your source a free-market thinktank, but the paper is from 2010. This just confirms the point in the OP

    The Swedish experiment, for quite a few years seen as the exemplar of success, has turned out very badly.

    On your claim about government schools, I’m interested to see you endorsing the second-best principle that as long as some people are getting subsidies, it’s OK for everyone to get subsidies.

  68. paul walter
    April 15th, 2015 at 15:24 | #68

    Nah.. Don’t get it.

    How can you have a form of education that avoids consideration of social and personbal construction and action unless it is for-profit education?

    This system won’t allow for criticism of itself, modus operandi and function and functioning, lest it discredit itself through the revelation of its underlying true rationale.

    Ok, I know- tongue in cheek.

    But let’s not get in the way of Murdoch/ Kcoh Brothers Tea Party civilisation’s efforts to gag, neuter, lobotomise cripple and deceive itself, otherwise we will never tip over the edge of that cliff, like demented Lemmings or Gaderene Swine.

  69. Alan Hunter
    April 15th, 2015 at 18:32 | #69

    Hey what is going on, why didn’t I get published, censorship?.

  70. Megan
    April 15th, 2015 at 18:58 | #70

    @Alan Hunter

    2 links will often send you to the bin (a “Reply” is counted as a link).

    There is a secret list of weird words which will also send you to eternal moderation.

    For example, [email protected]@.

    One trick is to try posting in chunks to see if part of your comment gets through and see if you can isolate the secret offending word.

  71. jt
    April 15th, 2015 at 19:47 | #71

    The IEA publication gets basic facts wrong. It says:

    School competition in Sweden has increased levels of educational achievement.

    In fact Sweden’s PISA ranking dropped to below the OECD average and is now the worst among the Nordic countries. Two Swedish economists, Björn Tyrefors Hinnerich and Jonas Vlachos, uncovered the reason why:

    It’s the darker side of competition that Milton Friedman and his free-market disciples tend to downplay: If parents value high test scores, you can compete for voucher dollars by hiring better teachers and providing a better education—or by going easy in grading national tests. Competition was also meant to discipline government schools by forcing them to up their game to maintain their enrollments, but it may have instead led to a race to the bottom as they too started grading generously to keep their students.

    Also note that 10,000 Swedish students were left stranded after one private for-profit company went belly up. Thousands more have been left stranded when smaller for-profits declared bankruptcy.

    Private for-profit schools create moral hazard and it is has been absolute disaster for Sweden.

  72. Vjb
    April 16th, 2015 at 10:39 | #72

    unfortunately the fee help system is like Hire Purchase except that with fee help you do not get the product (an award) until you finish. Anytime there is apparently “free” government $$ there will be private sharks diving in to the pool.

    One option is for the provider not to get paid all of the $ until the product ie award is received by the student. This would require strict accreditation processes to ensure quality including admission standards to stop the Sharks preying on the unsuspecting customers.

    Check the ownership of some of these providers and you will find limited liability $2 entities or trusts as the ultimate owner with a network of other related entities providing “services” to cream off the profits.

  73. TerjeP
    April 16th, 2015 at 11:00 | #73

    I’m interested to see you endorsing the second-best principle that as long as some people are getting subsidies, it’s OK for everyone to get subsidies.

    JQ – in Australia there would hardly be any primary or secondary student anywhere that was not having their education subsidised by the taxpayer. If we allow students to take that subsidy to a “for-profit” institution there is no increase in subsidy nor anybody in receipt of a subsidy that previously wasn’t.

  74. J-D
    April 16th, 2015 at 15:01 | #74

    @TerjeP

    I note that you have still not offered any affirmative argument in favour of your stated position.

  75. TerjeP
    April 16th, 2015 at 17:01 | #75

    J-D – private schools in Australia are expensive. Fostering schools with the profit motive will provide an incentive for additional supply. Additional supply will foster price based competition. Which all else being equal should lower the price of private education.

  76. J-D
    April 16th, 2015 at 17:23 | #76

    @TerjeP

    So your goal is to lower the price of private schooling?

    I can’t think of any reason why that should be a goal deserving of public support.

  77. Peter T
    April 16th, 2015 at 17:31 | #77

    Terje

    For a price signal to work reliably, the product has to be a commodity (ie, simple, uniform, easily graded, readily quantified) and the externalities low. If you think that education has, or can have, these characteristics, I pity you. if you think that these characteristics are not required, and that price signals work reliably for almost anything, I pity you further. It is of course both permissible and common to keep one’s beliefs quite separate from observed reality, but it does not help when evaluating complex phenomena.

  78. MartinK
    April 16th, 2015 at 19:16 | #78

    @TerjeP
    “…Additional supply will foster price based competition…”
    Peter T has already given a more informed answer, but this is an assertion. Based on ideology not any sort of evidence at all, you have ignored JQ’s reasoning. Can you think of anything similar to education where this has been the case?

  79. TerjeP
    April 17th, 2015 at 08:20 | #79

    @MartinK

    JQ did not provide anything approaching reason. Just dogma.

  80. J-D
    April 17th, 2015 at 08:26 | #80

    @TerjeP

    John Quiggin supported his conclusions by reference to empirical data. You may consider his data unreliable, or insufficient, or misinterpreted, but it exists, and it’s not dogma.

  81. TerjeP
    April 17th, 2015 at 08:26 | #81

    J-D :
    @TerjeP
    So your goal is to lower the price of private schooling?
    I can’t think of any reason why that should be a goal deserving of public support.

    I can’t think of any good public policy reason to maintain a prohibition that makes private education more expensive. If you can then I’d love to hear the details. The ban on subsidises for children at “for-profit” schools is as arbitrary as if we decided that there should be no subsidy for children at Anglican Schools. As it stands we are happy to give a subsidy to providers motivated by Government or God but not those motivated by profit. Why the need for such prejudice?

  82. TerjeP
    April 17th, 2015 at 08:32 | #82

    J-D :
    @TerjeP
    John Quiggin supported his conclusions by reference to empirical data. You may consider his data unreliable, or insufficient, or misinterpreted, but it exists, and it’s not dogma.

    There was zero data provided by JQ. There may well be data that supports his argument but it has not been provided. I actually provided a scholarly paper with data but JQ dismissed it as out of date and inferred it was biased. He can do that if he wants but you can’t accurately claim that JQ has provided any alternate data. At least not in the post he has made here.

  83. TerjeP
    April 17th, 2015 at 08:34 | #83

    p.s. My other responses are stuck in moderation. 🙁

  84. Unanimous
    April 17th, 2015 at 14:00 | #84

    @John Brookes

    I agree with the point about exams. Well designed carriculums that are independantly set and assessed are the key. Unbiased and transparent feedback is essential for any control or management system.

    Funding methods affect fairness of access, but it’s the lack of quality control and lack of visibility to students about what the outcomes are that leads to the private rip-offs.

    By the way, there are plenty of not-for-profit rip-offs also in the non-government sector. In fact these are probably even worse. On top of accepting government money and loans to provide poor education, the directors of private not-for-profits also employ their family at high wages to do nothing, who then can all deduct of almost all personal expenses from taxable income.

  85. J-D
    April 18th, 2015 at 09:18 | #85

    @TerjeP

    In my view, the generic default position is not for the government to fund something but rather for the government not to fund it — no matter what the ‘something’ is. There is no need for negative arguments against publicly funding something when there are no affirmative arguments in favour of publicly funding it. I would say this about anything whatsoever. For example, in this context, I would say that if there are no affirmative arguments in favour of public funding of schooling-in-general, then it shouldn’t be publicly funded — no negative argument against doing so is required. I emphasise the word ‘if’ because I want to emphasise that I am not here taking any position on whether there are any affirmative arguments in favour of public funding of schooling-in-general. I know many people think there are and I’m not here disputing that. I’m just using an example to illustrate the generality of my position.

    However, it is not obviously the case that arguments in favour of public funding of schooling-in-general automatically translate into arguments in favour specifically of public funding of the schooling of children at for-profit schools. There’s a step in your chain of reasoning there that you have not spelled out, and this is why I say that you have not made the case in favour of your stated position.

  86. J-D
    April 18th, 2015 at 09:23 | #86

    @TerjeP

    John Quiggin cited (by URL link) two sources of data. They are not scholarly sources, but ’empirical’ is not a synonym for ‘scholarly’. ‘No support from scholarly sources’ is not synonymous with ‘no support but dogma’.

  87. TerjeP
    April 18th, 2015 at 13:02 | #87

    J-D,

    The articles JQ linked to are essentially just opinion pieces. I don’t see how you can refer to them as data sources. Even to claim they are “non scholarly” data sources is an overstatement.

    As for the default position of what should or should not be funded I agree with you most of the way. But to then carve out some students on the basis of school type, be it “Anglican Schools” of “for-profit” schools of whatever, does in my view require some justification. Otherwise we could say that an education subsidy that only applies to white kids needs no justification but extending it to black kids needs to be justified. Placing the onus of proof in such a way seems absurd to me. A subsidy needs to be justified. If we accept the idea that the education of children should be subsidised then any exceptions such as black kids, Anglican providers or for-profit providers all then require justification.

    As such it is my view that any decision to exclude for-profit schools from student subsidy needs to be justified. And as far as I can see no robust justification has been given. Just hand waving.

  88. jt
    April 19th, 2015 at 08:34 | #88

    Terje,

    Clearly you didn’t read the Slate article I linked to above. The voucher system in Sweden has been a stuff up because:

    – well over ten thousand students have been left in the lurch after private providers declared bankruptcy. Naturally the state then has to pick up the mess left by these private sector fails

    – PISA rankings fell to below the OECD average and the lowest among the Nordics

    – The voucher system has provided an incentive for teachers to give their students soft grades, with disastrous consequences for the quality of education

    Other than signed affadavits from dancing bears and hoola hoop girls, I’m not sure how much more evidence is needed.

    I would personally go much further than the good Professor and ban all private schools for reasons of political economy. That is to say, we need vocal and articulate middle class parents to have a stake in quality public education otherwise it runs the risk become nothing more than a mediocre safety net for the poor.

  89. Collin Street
    April 19th, 2015 at 09:04 | #89

    Terje: if you are trying to get people to change their mind, you need to explain to them what you think and why it’s better than what they think, not just state your conclusions.

    If I tell you I’m not convinced of some conclusion of yours, does it push you to change your mind? Why do you think that it works differently the other way?

    [there’s a trick you can use that might make arguing this way easier: you never state what you think, only why you think it. If you’re correct and doing it properly your conclusions are implicit in the evidence you’re looking at; if your data is up to scratch people will be convinced to come to your conclusions even if you never mention what they are.]

  90. TerjeP
    April 19th, 2015 at 11:00 | #90

    Collin – that is pretty much the point I was directing at JQ. He has not made a persuasive argument that would change anybody’s mind. Of course the opponents of profit will cheer at his commentary regardless.

  91. TerjeP
    April 19th, 2015 at 11:06 | #91

    JT – I’ve searched this page for the word “Slate” and can find no reference other than your latest comment.

    So long as we are doing argument by anecdote here is my contribution:-

    http://blogs.spectator.co.uk/coffeehouse/2013/07/what-stephen-twigg-doesnt-understand-about-for-profit-schools/

  92. jt
  93. J-D
    April 19th, 2015 at 16:12 | #93

    @TerjeP

    The articles John Quiggin linked to contained assertions about facts. You may think those assertions were inaccurate, or that they are being misinterpreted, or that they are irrelevant to John Quiggin’s conclusions or insufficient to establish them, but saying that a conclusion is supported only by inadequate information, misinterpretations, inaccuracies, and irrelevancies is not synonymous with saying that it is supported only by dogma.

    The general form of the argument John Quiggin is making against public subsidies for for-profit education providers is clear enough to me: public subsidies for education should not extend to for-profit providers because subsidised for-profit providers fail to deliver the goods. Clearly you are not persuaded that there is adequate evidence to establish that for-profit providers fail to deliver the goods, and I am not trying to persuade you of that. However, I hope you would accept that if the case were made out that subsidised for-profit providers fail to deliver the goods, that would justify excluding them from receiving public subsidy. If you are asking what possible reason could there be for excluding them, I hope you would acknowledge that, as a possibility, that’s a reasonable answer. If you want to argue that for-profit providers should receive the same subsidies as not-for-profit providers even if they fail to deliver the goods, I want to dispute that. But if you only want to argue that you are satisfied on the evidence that they do deliver the goods, that’s not an argument I’m interested in getting into. I just want to make the distinction clear.

  94. TerjeP
    April 20th, 2015 at 09:02 | #94

    However, I hope you would accept that if the case were made out that subsidised for-profit providers fail to deliver the goods, that would justify excluding them from receiving public subsidy.

    If “for-profit” schools were substantially and consistently inferior to “not-for-profit” schools as measured by reasonable criteria then all else being equal I would agree with the argument for excluding them from the general subsidy of childhood education. However I have no reason to believe that they are inferior. In fact the limited data from Sweden that I have managed to find indicates that they are as good as or slightly better than the alternatives. This notion is also supported by the fact that many parents choose to send their kids to such schools. The examples of Swedish “for-profit” schools that failed financially indicates that they failed precisely because parents withdrew their kids suggesting that parents are responsive in their decisions to poor schooling and suggesting the sector as a whole must therefore be healthy.

    And for what it’s worth the schools that did fail financially seem to have been merely taken over by new owners/management rather than closing down. People that see this as some serious problem must imagine that public schools never close down which is simply untrue.

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