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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.