The Government will implement a new Managed Growth Funding System for Commonwealth supported places to increase opportunity for students from underrepresented backgrounds and create a more diverse and flexible system of higher education.
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A new funding system to boost opportunity for disadvantaged Australians.
The new Managed Growth Funding System, alongside the demand-driven Needs-based Funding, will ensure Australian students, regardless of their background, have the best opportunity to participate and succeed in higher education.
The new system is expected to deliver an additional 82,000 fully-funded Commonwealth supported university places compared to current settings in 2035.
Staged implementation
The Managed Growth Funding System will be introduced through a staged implementation approach with a transition year in 2026 and full commencement in 2027. The staged approach delivers on the Accord recommendation and feedback from the sector to provide a predictable and transparent pathway to the new system, this will allow the Australian Tertiary Education Commission (ATEC) to be established before the new funding system is legislated and begins operating.
2026 transition year
From 1 January 2026, the transition to the Managed Growth Funding System will begin. Universities’ Maximum Basic Grant Amounts for Higher Education Courses (HEC MBGAs) will be adjusted in line with student demand ensuring that funding for teaching better matches student demand while also ensuring the change is not too sudden. Significantly underenrolled universities will see funding maintained in nominal terms, bringing them closer to the true cost of teaching their actual student load. Substantially over-enrolled universities will share in additional funding that means that more of their students are fully funded. Those providers in between these positions will have their funding indexed in line with legislated per place funding, to ensure that funding per student is maintained.
Support for structural adjustment
In recognition of the need for universities to transition to the new system, a Structural Adjustment Fund of $50 million will be available to the sector from 1 July 2026. The ATEC will develop grant guidelines for the fund in 2025.
Funding floor
To ensure structural stability and contribute to employment security in the sector, a transitional funding floor guarantee will apply in 2026. Table A Universities will be guaranteed the equivalent of their 2025 CGS payments.
Transition loading
A new transition loading will be provided to ensure that Commonwealth Grant Scheme (CGS) funding and demand-driven Needs-based Funding received by universities for 2026 is not lower than the amount of CGS funding plus other selected teaching and learning grants received for 2025.
CSPs for TAFEs and other non-university providers
To increase diversity of providers in the system and provide the opportunity for TAFEs to expand their higher education offerings, the Government will also invest an additional $33 million over the period to 2028 to provide 365 additional commencing CSPs each year in critical skill areas to TAFEs and other high quality not-for-profit specialist providers from 1 January 2026. Once fully implemented, this would mean around 1,000 CSPs each year.
Full Managed Growth Funding System implementation in 2027
(Note: 2027 implementation arrangements will be subject to further consultation with the sector)
From 1 January 2027, the Government, in consultation with ATEC, will set a total number of fully-funded Commonwealth supported EFTSL that can be allocated to the sector (Total Allocation Pool) each year. The ATEC will then allocate these places to providers through the enhanced mission-based compact negotiations.
The Government, on advice from the ATEC, may increase the Total Allocation Pool to ensure there are sufficient places available for eligible equity students accepted into a non-medical bachelor-level course.
Recognising that it is challenging for universities to plan for a precise number of enrolments, an over-enrolment buffer will ensure universities that enrol above their allocated places will continue to receive student contributions, up to a hard EFTSL cap.
To ensure the financial sustainability of universities and Australia’s higher education sector more broadly, a funding floor for Table A universities will remain in place until 2031, guaranteeing 97.5 per cent of CGS funding from the previous year.