Architecture

Will the study of architecture become unaffordable?

May 28, 2014

The deregulation and subsequent increase in university course fees delivers a profound challenge to the architecture profession. Will future architectural students be able to absorb the increased cost of education, or will many decide that the return on investment is financially unaffordable?

Text:  Wesley Perrott

As we are all too aware by now, the budget delivered by Treasurer Joe Hockey last week introduced changes to university education that will severely impact on recent, current and future university students. The measures include: cutting public funding to university courses by 20 percent, deregulating university fees, introducing a six percent interest fee on all HECS loans and the lowering of the HECS repayment threshold to $50,638. However, there are a few positive changes, which include the expansion of commonwealth-supported places to non-university providers such as Technical and Further Education institutes or TAFEs and colleges and an increase in the commonwealth scholarships funding.

These changes, specifically the deregulation of university fees, has sent shivers down the nation’s spine sparking nationwide protests at universities. The potential increase in fees has prompted many to question whether a tertiary education will become affordable once the changes come into effect on 1 July 2016. The question of affordability is rightly justified, but not in the way many perceive. Accessibility to university will be maintained via the HECS system, ensuring that the barrier to entry will remain at a minimum, but if course fees rise significantly, will young Australian’s be able to pay back a larger debt with interest, while juggling an increase cost in living, saving for a home and preparing for a family?

Every young person is in the same boat, including me, but some students’ futures will be affected more than others, specifically those who are required to partake in more than three years of study to enter a profession. Law, medicine and architecture students will be some of the hardest hit, as their required duration of study is greater than an average course. As Christopher Pyne will have you believe, the cost/benefit of a university education far exceeds the cost of education itself. This may have very well been true in the past, but downward pressures on wages in professions following the Global Financial Crisis has seen the prospects of a ‘large’ return on investment diminish significantly. It has also increased the difficulty for young graduates to find a job, with many students entering unpaid (or very low paid) internships to gain the illusive experience required to enter the workforce, further delaying a young professional’s earning capacity.

We all know that architecture pays poorly when you are an employee, not just in Australia but globally. In fact it is no secret that the architecture profession is (unfortunately) credited as being the lowest-paid professions when compared to professions that require a comparative duration of study. Consequently, this reality has prompted many fellow colleagues to depart architecture in search of a more financially rewarding career. At this point some of you may be noting this as a positive, as it reduces competition and provides those who stay with a bigger piece of the pie. But it is my experience that those who leave are in fact some of the most talented, who ultimately realise that unless you share in the profits of a practice, architecture can be an unyielding financial vehicle.

With this in mind, how serious will these budget changes be to the future of architectural students? It depends on one factor: how much course fees are raised. There is much speculation about this, but ultimately the answer lies in hands of the universities and whether they choose to act as a rational or irrational market. The Australian National University’s Vice Chancellor, Ian Young, suggests that fees will rise by approximately 30 percent, which would raise the average cost of a five-year architectural course to around $62K (for a Commonwealth supported place).

However, if local fees are matched with current international fees, this could rise to around $150K, or $195K if one includes the 30 percent increase. Even if fees increase by 30 percent, will architectural graduates be able to pay it back while savinf for the future? The cost is a complicated equation when factoring the six percent interest and the average salary of an architect since the latter can vary substantially. Nevertheless, let’s give it a go by assuming that the average wage is that stipulated in the Australian Institute of Architects (AIA) ‘2010 Award Wages’.

So, at the age of 25 you finish the five-year university course with a $62K debt, you spend three months looking for a job, thus have to borrow another $3600 to live on since the government has cut access to Newstart for those under the age of 30 for the first six months of unemployment. You now have a debt of $65,600. You find a job, pay back the $3600 loan (most likely put on a credit card) and get paid the ‘Graduate of Architecture’ award wage of $47,613 (four-year average Level 1–2a). This means that you are not yet at the minimum HECS repayment threshold and therefore your debt has ballooned to $78,273.57 ($246,183.01 in the worst-case scenario) over four years, thanks to the six percent interest (compounded annually).

You become a registered architect at 29 and are now paid $54,190 per annum (Level 2b). Assuming that your wage remains the same (although in reality it won’t) and you pay every dollar of your wage above the $50,638 threshold each year ($3552) to eliminate your debt, you will actually not be able to pay off your debt as early as you had planned. In fact, you will need to pay $4696.41 per annum just to cover the interest repayments. Consider the worst-case scenario and it is most likely that you children’s grandchildren will still be paying off your university debt.

The substantial increase in university course fees is a profound issue for the architectural profession if it desires to entice (and retain) talented people in the future. Again, for those who are cheering that there will be less competition, be aware that you are also cheering for the increased inequality of our profession. Those who do not have the luxury of a financially supportive family/network will choose to not enter the profession, as they will not be able to subsidise a low income to pay off their course debt, save for a home and raise a family.

Assuming that the measures are adopted by the Parliament, what can we do to help future architects? One could lift the AIA’s award wages to accommodate the fee increase, but with the reality of decreasing architectural service fees, it is highly unlikely that all employers will be able to absorb a proportionate increase in wages. It is also unrealistic to assume that every architect will want to establish his or her own practice or that our industry could sustain such a trend. Subsequently, the forthcoming issue of affordability highlights a true crisis for the profession’s continuation; if the fees increase, the profession will need to adjust.

The logical mind would suggest that if you need to offset the rising cost of education (without raising wages), one must reduce the amount of time spent in education. I once had a discussion with an architect whose view was that one only needs to partake in three years of study to do what he does (small residential projects), and that those who have the desire to work on larger civic projects should continue with a further 2 years of study. Consequently, this would give more structure and ‘narrative’ to the current architectural courses, where quite often a student may not ever design a residential project while at university. This proposal would be a radical change to architectural education, but not necessarily to how the profession operates. Service niches are already a reality in the architectural industry, so I wonder if this measure just reflects the market reality.

There is no doubt that the proposed funding changes to university education deliver significant challenges for young graduates and their respective industries. Unless the measures are blocked in Parliament or the Palmer United Party rises to establish ‘free education’, relevant industry bodies such as the Australian Institute of Architects will need to address the issue of unaffordability and resulting inequality as a matter of urgency. We must do everything possible to ensure the participation of future generations in our profession and ensure that it is accessible to all.

  • nadine May 28th, 2014 4:51 pm

    could this be the reason less and less architects are having families? I won’t in one of Melbourne’s largest office for 4 years with over 100 staff. only 2 people in 4 years went on maternity leave. this is not a fair representation of society. life is too expensive to consider kids with the above mentioned costs the profession of architects is surely a road to depopulation of the first world. work later and longer people then go home to your cat, if you can afford to have one!


  • graham May 28th, 2014 5:51 pm

    “Consider the worst-case scenario and it is most likely that you children’s grandchildren will still be paying off your university debt.”
    Last time I looked “HELP Debt” was NOT an “inheritable debt”…Please check this link

    http://askune.custhelp.com/app/rescentral/detail/a_id/2375/related/1

    Having said that, I totally concur with ALL your comments.

    cheers


  • Jay May 28th, 2014 6:43 pm

    Man..I am 29 with 2 kids trying to earn enough in this profession to be able finish my final year, pending the ability to get a Commonwealth Supported place. Thinking career change may be on the cards.


  • Chris Bamborough May 28th, 2014 7:56 pm

    Great read Wes, it’s really worrying that fees and costs go up but yet the perceived value from clients goes down hence the fees. As someone who is on a low architects wage but has family and home costs to balance it’s not far from my mind to jump ship into another more profitable industry. Part of me is interested in how resilient the industry will be after this but the move by Pine that forces the change is just belligerent and misinformed.


  • Ben May 29th, 2014 4:57 pm

    Another good reason to not “specialize” as that what architecture really is in the building industry. If you want to increase your chances of getting a job, and pay off your hecs sooner, your better off not limiting yourself to just Architecture. At 26 im in my final year of construction management after completing an Architecture degree, and I can apply for Project management, contract admin and quantity surveying jobs (which are all much better pay) to name a few. You could also look at environmental science, town planning, or civil engineering as a backup, and try to combine it with Architecture. Just a suggestion.


  • Felix May 29th, 2014 6:14 pm

    Don’t worry old mate Pyne is looking at having HECS debt liable to one’s estate upon death too.


  • Zoe May 29th, 2014 6:44 pm

    I’m one of those who have left the architecture ‘profession’. Mainly due to being in an unrewarding, uninspiring industry where you feel like you’re stuck in the 1st gear of life. I’m now it Town Planning and whilst it presents its own challenges, I feel far more at ease with what I’m doing and I’m getting paid almost double the amount I was on as a Graduate.

    I also find it funny that you’re considered a ‘Graduate’ for years after finishing your degree – I’m pretty sure this doesn’t happen in any other profession? Probably highlighting how inadequate the degree itself is.


  • Anna May 30th, 2014 4:01 pm

    Surely if university graduates earn (on average) 75% more than non-grads, then they pay more tax already?

    We do have a progressive taxation system after all.

    So is the real problem perhaps that our income tax rates are too low? We are the 5th lowest taxing country in the OECD (34 countries in total). With higher income taxes, those that actually earn more would in fact pay more.

    Having said that, I think there are really quite a few degrees that could probably be better off as diplomas, thus leaving them with less debt in the first place.

    As to why architects salaries are relatively low for our level of responsibility and education, I think that needs it’s own article/research project/thesis.


  • Ben May 31st, 2014 12:18 am

    Good article. Highlights a lot of the specific challenges for architecture in the changes. A couple of other points worth mentioning:

    - These changes will radically adversely impact architecture graduates who for one reason or another do not practise full-time. Mostly this will be women who take time off to raise children and then work part-time doing small projects or university tutoring. They will not be repaying their debt at all but the debt will be increasing with compound interest.

    - Students who were planning to take a work year in 2015 between completing the undergraduate degree and starting the masters in 2016 may find themselves subject to the new increased fees when they return as they are a new student commencing a new course. Not sure about this though, I contacted my uni about it and they were equivocal.


  • Ian May 31st, 2014 11:47 am

    This is scare mongering. The only concern would be tertiary students should have is that the threshold does not fall too low.

    Any who shy away from tertiary education because where their income goes higher than a reasonable threshold they may have to pay back part of the cost is living in a dream world. Life isn’t some sot of dream where everything is available and nothing needs be earned. The wonderful reason for that is that too many would fail to get the best out of themselves if they do that.

    Your society is a gracious one and a generous one. It has carried you through primary and secondary education propelling you to what it hopes is a brighter future than perhaps it itself had.

    Now when it comes to tertiary training it STILL provides the opportunity. Low interest long term loans which do not even have to be paid back if the courses fail to project you into a future capable of repaying it. It seeks that you wish to learn. It seeks that where possible a small percentage of the cost of your education be returned so that your children can make use of it.

    That the generosity of spirit shown by the society at large, the working poor, the battlers and the others could be reflected similarly by possible recipients may be the dream.

    Somebody or a couple indicated that architects are having fewer children. This is only a function of education fees loans to the extent that the loans may be enabling more to study architecture than the community satisfactorily currently support. This is not a reason to decry the present or incoming system of assistance.

    To wander off track and address incomes then.

    Architectural incomes are too low and the reasons are many fold. This may even be affecting child bearing but while that should make it a primary area of interest where we consider our businesses it should not be used in any way as a rationale for inhibiting entry into the schools. Those already within the field have an advantage but need to face whatever the competition.

    We have seen the alternative with dentists who with renewed business focus not only started to call themselves doctors around 1970 but controlled course intake in their own protection. The result has been a nation that cannot afford broadly to keep its teeth in good condition. Architecture has a long way to go before it is seen integral to every construction decision, perhaps a long way to go before it enjoys a role similar to that it enjoyed 40 or 50 years ago but that is the way to creative and financial happiness with social consequence not by limiting intake.


  • KG June 2nd, 2014 3:13 pm

    Well said Wes! It is very disturbing to note that the university debt accrued in acquiring an architecture degree is completely disproportionate to the income earned within the profession. Could the low wages & low architectural fees in Australia be a direct indication of Australia’s lack of value or understanding of what Architects do or am I suffering from a bad case of “cultural cringe?”

    Correct me if I am wrong but friends in Norway say they are payed the same as doctors. Norwegian society understands that an incision made within the urban fabric can be just as life threatening/ powerful as taking a scalpel blade to a persons body. Graduates in Denmark are able to call themselves Architects immediately upon graduation which shows a level of confidence in their abilities obtained from a 5 year architectural education. Whilst in Australia there is a level of confusion over what we can be called (architectural graduate, architectural technician, architectural assistant) let alone what we do! And to gain the title of Architect through registration in Australia is also an expensive process which when on the award wages proves difficult or unaffordable.

    Could adopting a policy in Australia similar to those in Denmark where….
    “the premise of the Danish policy is that high quality architecture contributes to a high quality of life, which in turn contributes to economic growth.”
    as stated in Sara Best’s ADR article “Cities need policy, not just charity.”
    be a way of improving the economic viability of the profession? You only need to look at the Sydney Opera house to see how much revenue has been generated through tourism to justify this argument.

    I am one of those architecture graduates that has tried to diversify their career opportunities by studying an engineering degree with the hope of one day combining it with my passion (architecture). But this has accrued a debt of $50,000 and climbing. Not to mention it takes 9 years to complete both degrees. Again even within the Australian engineering sector/education little monetary value is placed on design & innovation & the most talented are lured into the lucrative role of project management within the mining sector.


  • ST June 2nd, 2014 3:54 pm

    Well said KG. Wesley’s article is certainly alarming reading, particularly if you have recently enrolled in a degree in architecture. It certainly brings the issue of return on investment and financial reward of architecture as a career path into sharp relief, and reveals another aspect worthy of discussion. Anna’s earlier comment: “As to why architects salaries are relatively low for our level of responsibility and education, I think that needs it’s own article/research project/thesis”- alludes to this.
    The majority of architecture practices in Australia are smaller firms (up to 6 people), as revealed by the recent ACA survey on the perceived effects of the budget on our profession. Architecture doesn’t just pay poorly as an employee. It doesn’t always follow, but often directors of smaller practices remunerate themselves inadequately by comparison to their experience, the hours they invest and the professional risk they carry as principal. There are many reasons for this, but they include the sizeable overheads of running a practice, insurances and the ever-increasing yoke of compliance on the project procurement process. Combined with constant downward pressure on fees, low project volumes and a high degree of competition in the market, and architecture’s attractiveness, in a financial sense, becomes less alluring. Lifting the AIA Award rates for employees will only amplify the mismatch between expenditure and fee income for firms, meaning less capacity to employ graduates. So the common assumption that architects are a highly paid elite is somewhat a misconception; for many architects who devote vast energy to the profession and invest heavily in their practice, the Pyne “cost/benefit” rhetoric rings hollow.
    This is not to be pessimistic. Architecture remains a dynamic, sophisticated and creatively fulfilling vocation. However, as the economic and bureaucratic climate increasingly marginalizes design, the deeper question for our profession, which for many practitioners remains unanswered, is will the value of our contribution be properly understood by the consumer into the future.


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