Australian higher education will receive an additional A$560 million (Pounds 229 million) in federal funding over the next five years, while the nation's working citizens have been promised tax cuts worth A$37 billion.

The Australian Government last week announced that in its annual budget there would be a surplus of some A$17 billion, but it largely ignored universities.

When Peter Costello, the federal Treasurer, did make references to higher education, it was to the private contributions of students towards the cost of their study.

From 2007, Mr Costello said, most Australian students prepared to pay the full cost of tuition would be able to take out federal loans of up to A$80,000 over an entire course, an increase of nearly A$30,000.

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For students studying medicine, dentistry and veterinary science, the maximum loan would be A$100,000 even though the total cost of these courses in many universities is double that sum.

Universities have come to rely increasingly on student fees to make up for the lack of any growth in federal spending. As a result of raising the loan limits, the Government expects students to borrow up to A$80 million to meet some of their course costs over the next four years. But this could increase sharply and push student debt to more than A$11 billion.

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Government estimates indicate that nearly a third of the debt is unlikely to be repaid. The amount to be written off has risen fourfold since the election of the Howard Government in 1996 - from A$690 million to more than A$3 billion last year.

Despite raising the loan limit, universities will not be able to enrol more full-fee students above the maximum of 35 per cent in any one discipline.

Within the A$560 million of additional spending on universities, A$220 million has been allocated for extra medical, nursing, mental health and psychology places. Universities will get nearly A$96 million extra over four years for capital works.

The Australian National University has been given A$125 million for its building programmes, of which A$50 million will go towards rebuilding the famed John Curtin School of Medical Research.

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Although universities had called on the Government to allocate A$50 million to cover the costs of preparing for a new system of allocating research grants, the Government set aside A$3 million for development of the research quality framework.