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A trial of deregulated fees at selected universities, a choice to "opt out" of the deregulated system and giving more money to institutions whose students get jobs are some of the ideas to be presented to Education Minister Simon Birmingham as he reworks the Turnbull government's higher education policies.
Senator Birmingham on Thursday announced the government would not introduce changes to university funding until 2017, after the next federal election. He has called for ideas from the Senate crossbenchers, universities, students and business groups as he works to develop new legislation over coming months.
University vice-chancellors rallied around fee deregulation earlier this year but the sector is now fragmented, with many different options being proposed.
Palmer United Party senator Zhenya "Dio" Wang is calling on government to take a "step by step" process to introduce more competition into higher education sector. He said the government could conduct an experimental trial by allowing, for example, one capital city university and one regional university to set their own fees and see how they behave.
Alternatively, Senator Wang would be interested in a system allowing universities to opt in or opt out of fee deregulation. Universities that deregulate their fees would receive a 20 per cent funding cut while those staying in the current system would not.
The government should also consider giving financial incentives to universities with a good track record of employment for graduates, he said.
"We want our university graduates to find good jobs - that is the KPI [key performance indicator] for universities."
Senator Wang also wants the government to extend funding to diploma programs and private colleges to allow them to compete with universities.
University of Sydney vice-chancellor Michael Spence said on Friday there were "lots of part-deregulation options" for the government to consider.
These include creating a regulator to scrutinise fee increases or introducing significantly higher caps on fees.
"There are many intermediate options we need to talk about with the government," he told ABC radio.
Dr Spence has said higher fees for students should remain part of the discussion.
Victoria University vice-chancellor Peter Dawkins has proposed reducing Commonwealth funding for universities that increase their fees over threshold amounts. The architect of the HECS repayment system, economist Bruce Chapman, has backed this approach as a way to give universities more control over their fees while preventing massive price hikes.
University of Newcastle vice-chancellor Caroline McMillen said she was "very cautious" about fee deregulation.
"In the absence of funding cuts, it's not something that would particularly be on our agenda," she said.
Leading expert Peter Noonan, who advised the Hawke government on higher education policy, said Senator Birmingham should set up an expert panel to advise on reform options.
This should include guidelines on how universities would spend the extra money from increased fees.
"Substantial increases in student fees to pay for university research is not good policy," Mr Noonan, a professorial fellow at the Mitchell Institute for health and education policy, said.
"The government should be very clear that fee increases are to be used primarily for teaching an learning."
Independent senator Nick Xenophon said he would support a short-term increase in what universities can charge students while the government undertakes a comprehensive review of the sector.
