Australian universities
Australian universities have been urged not to be too dependent on international students for revenue. Source: Jason Lee/Reuters

Australian universities have been warned against overly relying on international students as their major source of revenue.

A report by The Centre for Independent Studies (CIS) is sounding the alarm, calling the practice a “high-risk” and “multi-million dollar gamble” on taxpayers’ money. 

Its author, Salvatore Babones, notes that failure for universities to wean themselves off the revenue generated from the international student market – particularly those from China – may result in taxpayers footing the bill should things go south.

Australia’s top 10 sources of inbound students. Source: CIS

China is the largest source of outbound international higher education students in the world, based on data compiled by UNESCO. The country has also consistently been the world’s largest source of international students for the last two decades, with numbers increasing six-fold – from 134,000 to 869,000 – over this period. 

Unsurprisingly, they represent the largest source of inbound international student numbers in Australian universities. 

But trends show that the number of Chinese international students across the globe have flat lined since 2016, with enrolments slowing dramatically in Australia in 2018 and now levelling off.

Among the universities heavily reliant on the Chinese market for revenue growth include: 

  • University of Melbourne
  • Australian National University (ANU)
  • University of Sydney
  • University of New South Wales (UNSW)
  • University of Technology Sydney (UTS)
  • University of Adelaide
  • University of Queensland (UQ)

In the list above, Chinese students account for over 50 percent of all international students. 

“Australia’s universities do not seem to understand the high levels of financial risk inherent in their overreliance on the Chinese market, and they certainly do not make sufficient data available to the public to inform a public debate on these risks. Instead of withholding data, they should follow [the] US and UK best practice in transparently reporting detailed student numbers by country of origin, level of study, and field of study,” argued Babones.

Other key information covered in the report includes:

  • International students account for roughly 25 percent of all students on Australian university campuses.
  • No public university in the US has as high a proportion of international students as the average public university in Australia.
  • Much of the growth in international student numbers at the seven focus universities has been directed into business education. 
  • Approximately 10 percent of all students now attending an Australian university are from China.
  • Over 40 percent of all onshore international students (and almost certainly the majority of international student fee revenue) come from China.
  • The University of Sydney led the country in 2017 in generating more than half a billion dollars in annual revenue from Chinese student course fees

Australia’s China-dependent universities face several risk factors

The report notes that Australia’s China-dependent universities face several risk factors that can be classified under political factors, competitive factors and macroeconomic factors. Some of these include: 

  • Potential political confrontations between Australia and China
  • Chinese concerns about the safety of Chinese students in Australia
  • Changes in Australian immigration policy
  • The rising quality of Chinese domestic degrees
  • The slowing of China’s rate of economic growth

While the high number of international students is beneficial to the Australian economy, these benefits are not as large as is often portrayed, notes Babones. He adds that even if the Australian economy as a whole does not rely heavily on international students, Australia’s higher education sector does. 

“Other education sectors also enrol international students, but international education in these other sectors is dominated by private sector companies, not public institutions. Risk-taking is part and parcel of doing business in the private sector,” said Babones.

“State-supported higher education institutions like universities may be less well-prepared to understand, evaluate, and plan for financial risks than are for profit companies. Moreover, universities are risking not their own money, but public money – and the public trust.”

As international students are overwhelmingly concentrated in Australia’s public universities, this financial dependence constitutes a risk to Australian governments, and ultimately, taxpayers. 

Mitigating risk factors in Australian universities

Measured on a per capita basis, Australia now hosts more international students than any other major country in the world. Source: CIS

Babones notes that Australia’s universities should, at a minimum, take the following four steps to address the challenges highlighted in the report:

  • Follow the US and UK best practice in transparently reporting detailed student numbers by country, level of study, and field of study.
  • Make, publish and implement plans to reduce reliance on international students to manageable levels, with targets set both for the university as a whole and for individual programmes.
  • Make, publish and implement plans to reduce the proportion of international students hailing from any one country to manageable levels, with targets set both for the university as a whole and for individual programmes.
  • Apply the same admissions standards to international students who pass through their income-generating preparatory programmes, as they do to students who apply for ordinary direct admission.

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