Socio-economically disadvantaged students are far more expensive to teach than their privileged peers, and funding should be overhauled to reflect that reality, research suggests.

In the first??of its kind, Australian researchers have quantified the costs of educating students from underprivileged communities. A team analysed 10 years of enrolment and finance data from 37 universities to find that low socio-economic status (SES) undergraduates ¨C those from the least affluent quartile of postcodes ¨C cost six times as much to teach, on average, as their better heeled counterparts.

Low SES postgraduates proved almost as expensive, absorbing four times the resources expended on those from wealthier neighbourhoods. While the average costs could be reduced by enrolling large disadvantaged cohorts, up to 2,600 underprivileged undergraduates were required to generate economies of scale.

The extra costs came from the institutional work undertaken to build aspiration in low SES communities, prepare people for university life and help meet their academic, financial and personal needs while they studied. Establishing and running multiple campuses in low SES regions, on the rationale that universities must go to the people rather than waiting for the people to come to them, generated huge additional costs.

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The researchers were astonished by their findings, but stand by them. ¡°The data is correct, the inputs are right and we followed the proposed methodology,¡± said Dan Edwards of the Australian Council for Educational Research.

The findings matched observations from 14 university administrators who were interviewed as part of the study, published in Higher Education Research & Development. Dr Edwards said that the research team¡¯s calibre also inspired confidence in the results. It included a former Universities Australia chief executive, Victoria University deputy vice-chancellor and director of the National Centre for Student Equity in Higher Education.

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Dr Edwards said the team had worried that its results might dissuade universities from even attempting to recruit low SES students because of the sheer expense. He said that until educating underprivileged students was reconceptualised as an investment rather than a cost, their stubbornly low participation rates might never improve.

Running campuses in disadvantaged areas costs universities ¡°ridiculous amounts of money, but it¡¯s not recognised in the funding¡±, he said. ¡°If we¡¯re serious about opportunity, there has to be investment.¡±

He said supplementary programmes for universities that focused on underprivileged communities, such as Australia¡¯s Higher Education Participation and Partnerships Programme ¨C which allocates about A$150 million (?85 million) a year ¨C were not enough. The results implied a need to fundamentally redistribute the A$7 billion-plus of annual higher education teaching subsidies.

The team recommends moving away from the current approach, where every student is subsidised equally, to give disadvantaged students up to six times as much funding or to vastly boost allocations to universities that embrace equity ¡°missions¡±.

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University of Technology Sydney vice-chancellor Andrew Parfitt acknowledged the extra cost of teaching disadvantaged students, but said extra funding for that purpose should be ¡°linked to the outcome¡±.

¡°If you try to do it the other way around and link it to the input¡­you end up with something so disconnected that the system becomes bogged down with a very distorted funding mechanism,¡± he said.

Dr Edwards acknowledged a risk of ¡°gaming¡± under the team¡¯s proposals, but said that outcomes-based approaches raised measurement issues. He said the team was not ¡°locked into¡± any particular solution but was keen to start a conversation. ¡°You can dismiss it, but the problem doesn¡¯t go away.¡±

john.ross@timeshighereducation.com