Is Australia’s international student bubble about to pop?

07 Mar 2018

Australia has in the past five years seen a phenomenal rise in international enrollments, the majority of them from China, but educational bodies are now urging universities to look into diversifying their student body to reduce their dependency on foreigners.

One in three students in Sydney is from overseas, and as of last December, about 166,000 or 43.3 percent of them are from China. Universities have been reaping the financial rewards for this boom since international students pay approximately AU$9,000 (US$7,000) more in fees per year than their Australian peers.

But experts say that as a hotspot for Chinese students, the country’s institutions are making themselves vulnerable to becoming ‘degree mills’. Overall, international student enrollment increased by 25,000 within five years, according to the Sydney Morning Herald (SMH), meaning universities are susceptible to overly stretched resources and subsequent suffering quality.

Higher education is now Australia's third biggest export worth $28B. Number of foreign students studying in Sydney area universities increased 50% over the past 2 years, more than the entire decade prior. https://t.co/eTm6LE9t0I https://t.co/DdHYzXmwnV

— chiko wong (@chikowong) March 5, 2018

Last year, 25 percent of students at Sydney University – the biggest institution in the state – were from China, the daily wrote.

Educational bodies say these universities should focus on enrolling students from all over the world to mitigate potential threats to Australia’s higher education sector.

“The increasing number of overseas students can have significant financial benefits to a university,” an Auditor General’s report in the Australian state, New South Wales said, according to SMH.

“However, there are associated risks, including pressure on capacity constraints and the need to maintain teaching quality. There is also a concentration risk from reliance on overseas students from the same geographical location in the event of an economic downturn from that region.”

Sydney University, international students, Australia

Last year, 25 percent of students at Sydney University were from China. Source: Shutterstock

The influx of international students has created a financial bubble that lifts Australian universities, and the wider economy, to unprecedented heights.

Overseas students studying in Australia generated AU$22 billion (US$17 billion) in 2017, up 10 percent from the previous year, according to a report by Australia’s Department of Education and Training. This makes international education Australia’s third biggest export.

But, what goes up must come down.

Political tensions between Australia and China, as well as poor graduate employment prospects, could cause this bubble to pop, reported SMH.

“An obsession with growing the international student market risks turning our universities into diploma mills that are not only highly vulnerable to any fluctuation in international demand but can also distract us from improving the quality and efficacy of our core teaching and research mission,” said Dr James Leibold, a China specialist at La Trobe University in Australia.

“If we are going to take the money of Chinese international students, we must find new and creative ways to not only engage with them but also challenge them, ensuring that they leave our university with not only a diploma but also new ways of thinking and a wider, more critically oriented horizon.”

Jiakun Liu, a current postgraduate student from China who is studying for a Masters of Information Technology at the University of Technology Sydney said: “I think it [the course] gives me broader knowledge and with globalization, everyone needs to learn different skills, so yes, it helps me a lot.”

But, the recent announcement that only half of the international students will be given temporary work visas upon graduation this year compared to the year before might dissuade students from studying in Australia.

Despite the new visa rule, international applications from Nepalese and Indian students as well as students from China were on the rise in 2017.