Australia’s higher education overseas student industry: in a precarious state

Higher education Educational finance International students Australia
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Australia’s overseas student industry has surged in recent years. It generated some $30 billion in export revenue in 2017 from the fees and living expenses paid by all overseas students in Australia ($20.7 billion attributable to the higher-education sector).

This is a remarkable record. Between 2012 and 2016 the number of commencing overseas students in Australian universities increased from 85,497 to 124,150. As a result, the share of commencing overseas students to all commencing students increased from 21.8 per cent in 2012 to 26.7 per cent in 2016 (Table 2, p. 8).

The overall figure hides a spectacular increase in the dependence of Go8 universities on overseas students. In the case of the University of Sydney, this share increased from 22.8 per cent of all commencing students in 2012 to 39.2 per cent in 2016. This outcome was similar for the University of Melbourne, Monash University and the University of NSW where, by 2016, the share of commencing overseas students to all commencing students was 36.2 per cent, 36.5 per cent and 38.7 per cent respectively (Table 2).

Despite this success, the industry is in a precarious state.

To understand why, we need to differentiate the industry into its two main markets. They are each vulnerable, though for quite different reasons.

The first comprises universities charging very high fees - $40,000 or more a year by 2018. These are primarily the Group of 8 universities. Despite the princely cost, the number of overseas-student commencements at Go8 universities increased massively, by 56 per cent, between 2012 and 2016. Almost all of this increase came from Chinese students (Table 1, p. 3).

The main attraction here for the Chinese students is the prospect of obtaining a higher education degree from a university rated amongst the world’s top 100. These ratings are based primarily on publications in prestigious international journals and citations in these journals.

For the most part, the Chinese are not attracted by the possibility of staying on in Australia.

The second market covers universities other than those in the Go8, all of whom charge much lower (though still high) fees of around $25,000 per year. Overseas-student commencements in these universities increased by 41 per cent over the years 2012 to 2016. Most of this growth came from countries located in the Indian subcontinent, particularly India itself.

Students comprising this second market are primarily attracted by the opportunities that study and graduation in Australia offer to enter Australia’s labour market and to access a permanent or longstay 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 (pages 16-17). 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. This provides a minimum of two years in the Australian labour market after completion of a university degree, regardless of field of study.

No such privileges are available in our chief competitor countries – the US and the UK.

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