Future Asian students vital to the health of Australian universities

Asia Australia World

Author: Peter Hurley, Victoria University

Over the past two decades, Australian universities have been lucky. Every time something has threatened their prosperity, a new opportunity has arisen.

International students wear graduation gowns as they take pictures around the University of Sydney's campus, Sydney, Australia, 4 July 2020 (Photo: Reuters/Loren Elliott).

International students wear graduation gowns as they take pictures around the University of Sydney's campus, Sydney, Australia, 4 July 2020 (Photo: Reuters/Loren Elliott).

When the Australian government reformed international student visas in 2009, the uncapping of domestic student places cushioned any blow. And when the Australian government effectively reintroduced caps in 2017, the international student market was experiencing blistering growth.

As a result, total university revenue has grown in real terms by 42 per cent between 2008 and 2018. Enrolments have also increased by 46 per cent over the same period.

That luck has run out with the coronavirus pandemic. Over 170,000 international student visa holders are stuck outside Australia, unable to enter because of travel bans. Unlike other sectors such as retail and hospitality, for the international education sector the worst of the pandemic is yet to come.

Australian universities, international students and those who rely on the international education sector are facing a confluence of policy crises in health, migration (border closures), and trade (tensions between China and Australia) that show no sign of quick resolution.

The decisions of students from East, South and Southeast Asia will play a major role in what happens next to the AU$38 billion (US$30 billion) a year industry. Students from these regions make up over 80 per cent of international student enrolments.

All Australian universities rely on international student revenue. They are often the most profitable part of the business. An international student will pay fees that are usually twice the amount of a domestic student. In 2019, Australia’s universities collected almost AU$10 billion (US$7.9 billion) in tuition fees from international students — more than twice the value of Australia’s entire annual vegetable crop.

The use of international students to supplement university funding has been part of Australia’s higher education policy for over 30 years, so this revenue supports many university functions. For instance, international students have been fundamental in supporting Australia’s research output.

The threat to this important income stream means there will be widespread impact on universities beyond teaching. This impact will vary by university. For instance, several universities receive over 50 per cent of their student income from international students. A university’s exposure to the crisis will also depend on how much enrolments fall over the next few years.

Prior to the pandemic, much of the discussion regarding the sustainability of the international education sector involved the need to diversify markets, particularly reducing exposure to China. Chinese international students had grown to be the largest cohort among international students in Australia, accounting for 38 per cent of higher education student visa holders in Australia in March 2020.

These students have been the premium end of the market. Whereas 61 per cent of international students are in higher education, 82 per cent of Chinese students in Australia are in higher education. So Chinese international students are paying higher tuition fees than other cohorts who study at non-university providers. ABS census data shows that Chinese international students are much less likely to access the Australian labour market while studying compared to groups such as Indian and Nepalese students.

They are also the group most displaced by the pandemic. The Australian government introduced travel restrictions for people coming from China in February 2020, when new and returning students were supposed to be entering Australia for the start of the academic year.

In January 2021, 61 per cent of the 170,000 Chinese international student visa holders were outside Australia. This compares to 18 per cent of the 377,000 non-Chinese international student visa holders who were outside Australia during the same period.

The outlook for 2021 is not good. Currently, only 125,000 international students have an enrolment end date beyond 2021 — a reduction of almost 80 per cent from the 580,000 international students inside Australia pre-pandemic. Continuing border closures mean that it is unlikely universities will be able to replace the ever-diminishing stock of international students finishing their courses.

But while 2021 looks set to be the year when the international student crisis really starts to hurt, there are some encouraging signs of renewal.

Application numbers are down considerably compared pre-pandemic levels, but they have stabilised somewhat. Despite the trade tensions with China, applications from Chinese students have not fallen as much as applications from other countries. Of the 30,890 new international students who began a course between July and November 2020, 48 per cent were from China.

There are many advocates for international education in various levels of government and a great deal of will to support the industry.

Post-pandemic, the composition of international students in Australia may change. Even if countries like China become less prominent, it is still possible for Australia to have a healthy, albeit smaller, sector. For instance, before the pandemic, 68 per cent of international student revenue, or AUD$25.5 billion, came from countries other than China. This suggests there are many markets Australia can target to regrow the sector.

If the international education sector can find its way through this year, then its prospects are much better for 2022 and beyond.

Peter Hurley is an Education Policy Fellow at the Mitchell Institute, Victoria University.