Charles Sturt University says the new funding scheme tied to performance should work in favour with their positive graduate outcomes.
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The new measures are part of the federal government's plan to increase spending on bachelor-level courses, with a rise of about $80 million annually from next year.
However, vice-chancellor Andrew Vann said the extra funding will not make a huge contribution to the organisation's current $600 million turnover.
"It's about $80 million across all the universities in the first year and it's recommended that it will compound and go up to about $240 million over three years," Professor Vann said.
"It should be somewhere from $2 million rising to $6 million for us of that sort of order.
" ... it's a few per cent of budget, so it's significant but also not going to be catastrophic if you didn't get it."
The new funding scheme from the Morrison government will measure universities for how well they perform in graduate employment outcomes, students success, student experience, and enrolment of Indigenous, disadvantaged and rural students.
Professor Vann said the university is already excelling in three out of the four areas, but argued this new scheme should improve both the institution's and student performances.
"It's an extra incentive for us to focus on these things ... these are all things we focus on anyway and there is now some money associated with reaching the targets," he said.
"We do extremely well on equity group participation; we're leading the sector around this and we do extremely well on graduate outcomes measured by overall employment and again we're at the top of the sector.
"Mature aged students, which we have a lot, tend to drop out more than school leavers, so that's something [in student success] we'd expect to see that down.
"But, they contextualise that based on the makeup of your student body, so I think we're waiting to see the details on this and what it looks like for us," he said.
The vice-chancellor said the university will make sure there is the right support services in place for mature aged students.
"A lot of our students would be working mothers for example, and many times they drop out because they have an illness in the family and a lot of it is about life circumstances rather than anything the university does," Professor Vann said.
"We need to make sure that we get the right support services in place and we are teaching as well as we can so that people can study, but we can't control everything.
"That's where they've got this contextualisation to adapt to that and in theory it should predict how well we are doing and they'll compare our actual performance to that."
Professor Vann said the freezing of the university funding has been tough for all universities.
"We've had no rise in funding from the government; we've had a little bit of growth through student contribution, but it's hard," he said.
"I think university staff are working very hard, so it's been a hard time and I think it's good to bring some growth back into the centre.
"The Education Minister has made a claim that he is willing to work with us if we make a good case of public investment, we think we do ... but I think it's something that we need to work on with the Minister and the government in going forward."
Overall, he said this was a good approach, but more detail was needed.
"I think it's a good approach overall because what they're doing is you don't not get the money, but they'll tie it to improvement initiatives," Professor Vann said.