Federal Education Minister Jason Clare introduced a bill to parliament on Thursday that will see universities face new caps on domestic student numbers.

At the same time, the government will fund additional student places. It says this will add up to 230,000 new commencing students over the next decade. This is to help attract more students from poorer families and regional and country areas.

How the tension between caps and growth plays out in practice will determine the success of Clare’s policy agenda.

How does domestic student funding work?

The bill’s biggest change modifies how universities are funded for “Commonwealth supported students”. This describes how the federal government subsidises the costs of a student’s study.

Almost all domestic undergraduates and a large proportion of postgraduates are Commonwealth supported students.

The bill does not change the underlying per student funding rates. These remain a combination of a Commonwealth contribution paid by the government and a student contribution (commonly paid through a HECS-HELP loan).

And the high Job-ready Graduates fees for arts, business and law students will remain in place.

But the way universities receive this funding will change.

Under the current system, each public university receives a maximum basic grant amount that covers Commonwealth contributions in higher education courses. For 2026, these add up to A$7.75 billion.

From 2027, universities will receive a maximum allocation of student places rather than a maximum dollar amount. This allocation will be made by the new Australian Tertiary Education........

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