University fees, subsidies and field of study

Melbourne Institute Working Paper No. 11/23

Date: September 2023


Maxwell Yong
Michael Coelli
Jan Kabatek


We estimate the effects of discrete changes in student fees and government subsidies on student field of study preferences and enrolments at university. These estimates are constructed using both standard two-way fixed effects models and Conditional Multinomial Logit models using individual unit-record applications and enrolments data from the largest Australian state of New South Wales. Student preferences are negatively related to student fees but the elasticity estimates are not large. This is likely due to generous income-contingent loans with a zero real interest rate that cover all tuition fees. University enrolments by field of study respond to changes in fees and subsidies in a manner consistent with student preference responses rather than teaching revenue maximisation. This may be due to supply constraints, reputation concerns and other organisational priorities.

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