[sandoooo]

Far as I can tell, the government has several levers that they are pulling/not pulling here (somebody correct me if I'm wrong, I'm just getting this out of news articles, not primary sources):

- they are partially directly subsidizing the cost of degrees for domestic students. The extent of subsidy has not changed in the new policy. (questions: is the direct subsidy the same for all degrees? do arts currently get more or less than STEM?)

- they set the fees that universities are allowed to charge students. In the new policy, the allowed fees for humanities have doubled, the allowed fees for STEM has decreased.

- also, there is HECS/HELP, which is a scheme where all domestic students (not PR/exchange) are allowed an interest-free, CPI-indexed loan that is only paid back slowly when the student's wages go beyond a certain threshold. This is for the full cost of the entire degree, and is a big part of why students tend to be price-insensitive.

- fees for international students are roughly 5x domestic students, and they don't get HECS/HELP. They are basically subsidizing the entire system. The covid situation has dried up this revenue stream and now the unis (who have not been financially prudent during the fat years) are deep in the red, with rumors of bankruptcy starting to circulate.

editorializing:

1. Arts and humanities are bad choices if you're already poor. If you're from a rich family it's actually pretty great - light course load, personal growth, better male/female ratio, etc. If you're poor and you do arts, you will have trouble getting a job. People should be allowed to choose whatever degree they want, but the government shouldn't subsidize bad choices.

2. The government seems to be implementing this in a suboptimal way. It seems that there is a fee increase but no decrease in subsidy (or there's a mismatch). I would just lower the subsidy for arts/humanities and allow a fee increase that matches exactly.

3. I doubt this will produce worse engineers. The engineering degrees in good unis are heavily sought-after and difficult to get in, and this just increases the number of applicants, while the number of available places won't change much. I think the largest effect is unis will spend more on marketing their arts degrees, since these will be more profitable going forward.

If it leads to the arts departments upping their game to attract students, it's probably a net plus.