Uni students pledge to fight fee hikes

Universities will be able to charge what they like while government contributions reduce from 2016. Source: AAP

A BODY blow or historic reform?

The reaction to the deregulation of university fees depends on whether it causes pain or gain.

University students say the Abbott government's "horror budget" will leave them drowning in debt.

They face a double financial hit from 2016, when universities will be allowed to charge what they like while government contributions reduce.

"Thousands and thousands of parents around the country will be worrying about how their children are going to afford their education," National Union of Students president Deanna Taylor said.

Meghan Hopper from the Council of Australian Postgraduate Associations didn't mince words: "This budget sucks for students."

But the nation's top research institutions and private higher educators are thrilled.

ANU vice-chancellor Ian Young, chair of the Group of Eight, said the moves reconciled access and equality and made growth affordable for universities.

The government hopes the changes will force Australian universities to be more competitive.

It wants at least one local institution to break into the world's top 20, and more in the top 100.

The budget also provides subsidies for all diploma and sub-bachelor students - a massive expansion of the demand-driven system.

The Council of Private Higher Education chief Adrian McComb says the measure delivers everything the sector wants.

It's expected expanding places will lead to the government subsidising an extra 80,000 students by 2018 at a cost of $820 million.

However, it will still bank $1.1 billion from cutting an average 20 per cent from student payments.

Non-university providers will get smaller subsidies than universities.

Mr McComb said the finer detail of arrangements were still to be negotiated.

"Some of that is not cheaper to teach in fact, the sort of work you need to do with sub-bachelor degree students," he told AAP.

The group representing all universities was more circumspect about the changes, saying it was disappointing the likely increase in student fees was being offset by a significant drop in government contributions.

"In combination (with lower indexation) that represents a reduction of around $1.9 billion over the forward estimates," Universities Australia chief Belinda Robinson told AAP.

The budget changes will affect anyone who accepts a higher education place after Wednesday.

Students already enrolled at the time of the federal budget won't be affected unless they're still studying at the end of 2020.

In a small sweetener, universities will have to put $1 from every $5 raised from fee hikes into scholarships.

Students, however, don't think that is especially sweet.

"(Treasurer Joe) Hockey is claiming to provide more opportunity for low-SES (socio-economic students) and rural students while he's making them foot the bill for their own scholarships," Ms Hopper said.

Another $3.3 billion will be saved from changes to the higher education loans program.

Graduates will have to start repaying the loans once they earn $50,638 from mid-2016, almost $700 less than now.

Their debts will be indexed at a higher rate, capped at 6 per cent, depending on what it costs government to borrow.

At the moment, the rate is indexed in line with inflation - currently about 2.5 per cent.

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