University of Newcastle Vice-Chancellor Alex Zelinsky has backed calls to remove financial disincentives to studying degrees with lower earning potential.
The Morrison government's job-ready graduate scheme in 2021 overhauled the funding of university degrees in an effort to deter students from courses such as arts degrees and into ones deemed areas of demand.
While the cost of degrees such as teaching, nursing and engineering dropped, students studying arts, law, business are now bearing up to 93 per cent of the cost of their education.
Data released by the federal Education Department in July showed the cost of a three-year arts degree will reach $50,000 for students beginning their studies in 2025.
"There are some real distortions around student contributions. I actually think it's unfair," Professor Zelinsky said.
"In the end people want to study what they are interested in and what they want to work in.
"It (Job Ready Graduates) has probably moderated behaviour somewhat but it hasn't had the effect that the government was hoping for."
While it had incentivised some degrees for prospective students, it barely provided universities with enough funds to cover direct teaching costs.
"We're then left with the indirect teaching costs - academics are employed to do research and we need capital funding and operating funding for buildings and maintenance," he said.
"Where does that money come from? We're forced to rely more and more on international students because the funding from the government barely covers direct teaching costs."
University of Western Sydney Vice-Chancellor George Williams recently told the Sydney Morning Herald that students were being forced to quit their studies due to education soaring costs.
"Something that really burns at me is the fact we're about to have $50,000 degrees for arts students," he said.
"Arts degrees are often the degree of choice for low socioeconomic status students, for indigenous people, and for women."
The government-commissioned University Accord review recommended scrapping the job-ready scheme, finding only 1.5 per cent of students changed their course preferences as a result of it.
It also found it left students with high debts which were not reflected in their future salary potential, as a result, it argued fees should ultimately be based on projected lifetime earnings.
The accord recommended university funding be delivered on a needs basis, similar to primary and high school funding, where extra loadings are provided based on student and institutional disadvantage to make the system more accessible.
But while the federal government has agreed the Job Ready scheme had failed to achieve its stated goal, it has not committed to repealing it.
Professor Zelinsky said he hoped the newly established Australian Tertiary Education Commission would drive long-term reform including the setting of university fees.
"I can't see when new funding flowing until probably 2026 or 2027. "That's a long time," he said.
