On the surface, Australia has been enormously successful in selling higher education to foreign students. But experts warn that the situation facing the nation’s top universities is dangerously precarious.
This year, Australia’s education institutions are collectively expected to generate more than AU$32 billion (US$23 billion) in export revenue from the fees and living expenses outlaid by 700,000 overseas students in schools, colleges and universities.
Of this huge sum, universities will recoup an estimated AU$21 billion from some 550,000 foreign students, a number that has jumped by a staggering 80% in the past five years.
But a new study has found that this overall figure hides a spectacular increase in the dependence of Australia’s leading universities on the revenue earned from one major source: the fees paid by foreign students from China.
Researchers Dr Bob Birrell and Dr Katharine Betts warn that the heavy reliance that these universities have allowed to develop on the fee income from Chinese students puts them in danger.
Should China decide to curtail, or even ban its students from enrolling in Australian education, the impact on many local institutions could be disastrous.
In their report Australia’s Higher Education Overseas Student Industry: In a precarious state, Birrell and Betts of the Australian Population Research Institute point to the University of Sydney as a potentially precarious example. There, the proportion of foreign students enrolling for the first time increased from 23% of all new enrolments in 2012 to 39% four years later.
That is, nearly four in every 10 students on the University of Sydney’s campus are from some other country. And, for the great majority, that country is China.
This huge increase was similar at other leading institutions, including the universities of Melbourne, Monash and New South Wales.
By 2016, say the researchers, their share of commencing overseas students among the total number of newcomers was 36% for the University of Melbourne and Monash University and nearly 39% for the University of New South Wales.
The contribution these foreign students make to the universities’ revenues is enormous. Were that income to fall away, the institutions would face serious financial problems.
Most Australian students face fees of less than AU$10,000 a year – which they can defer paying until they graduate and are earning a good income.
But those from overseas must outlay large sums in tuition costs on enrolment, plus have as much money again to cover their living expenses.
Industry in a precarious state
Birrell and Betts note that Australia’s 39 universities are effectively split into two groups: the leading group of eight institutions and the other 31 that are listed much lower in international rankings.
As they also point out, the top universities charge foreign students very high fees – AU$40,000 or more a year – and these are primarily in the ‘Group of Eight’, known as the Go8.
“Despite the princely cost, the number of overseas student commencements at Go8 universities increased massively, by 56% between 2012 and 2016,” the researchers write in their report.
“[But] almost all of this increase came from Chinese students. The main attraction here for these students is the prospect of obtaining a higher education degree from a university rated amongst the world’s top 100.”
For the most part, the researchers say, Chinese students are not attracted by the possibility of remaining and working in Australia – a strong lure for those from most other nations.
Apart from the high-cost Go8 universities, all the rest charge foreign students much lower fees, although still high, of around AU$25,000 a year.
“Overseas-student commencements in these (non-Go8) universities increased by 41% from 2012 to 2016 [and] most of this growth came from countries located in the Indian subcontinent, particularly India itself,” the researchers found.
They say that students in this second group are primarily attracted by the opportunities that study and graduation in Australia offer: namely, to gain access to the country’s labour market and to obtain a permanent or long-stay temporary visa.
“We show that the surge of enrolments in this second market has been largely due to the Australian government’s opening up of these opportunities in 2012.
“A key initiative was to allow all overseas student graduates, including those completing two-year masters-by-coursework degrees, to gain access to a work-study visa.”
The visa provides graduates with a minimum of two years in the Australian labour market after completing their degrees, regardless of the field of study.
No such privileges are available in Australia’s chief competitor countries – the United States and the United Kingdom, say the researchers.
So why has there been such a surge in enrolments from overseas nations?
Birrell and Betts say that while the federal government has continued to cut the rate of growth in its spending on universities, the institutions have found a way of compensating by vastly increasing the number of overseas students they enrol.
In the case of the Go8, the researchers suggest there is “much to admire in their attaining top-100 world university ratings”.
“But this success has been achieved to the neglect of their teaching effort as well as neglect of any moves towards vocational education and industry-oriented research. Such work does not contribute to international ratings.”
Birrell and Betts argue that the Group of Eight and, increasingly other universities, are involved in an “arms race” to maximise research that prioritises the kinds of output that contribute to these ratings.
“It is a vicious circle in which high ratings based on favoured types of research help drive overseas-student enrolments, and the revenue delivered is a crucial contributor to the production of this research.”
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