Parochial thinking in a global student business

Over the past two decades or so, one of the most startling but often unnoticed business developments in several economies has been the rise of international and transnational education.

During that period, for example, the activity has become Australia’s largest service industry and ranks consistently in the top four export industries along with mining, tourism and agriculture. General estimates put the business at around A$18 billion (US$15.4 billion) per year.

Across the Tasman Sea, New Zealand, with a population of around four million, now generates around A$800 million per year from international student fees, another sizeable contribution to that country’s impressive economic growth.

As a sign of the rapid development in this market, some of Australia and New Zealand’s best customers have now become rivals.

In Singapore, roughly 18% to 20% of its total tertiary enrolments are international students. By 2010, Malaysia had enrolled 86,000 international students and by 2014 had an annual recruitment target of almost 50,000. Canada had enrolled 265,000 by 2012.

As ever, though, the world’s two biggest markets roll on. The United Kingdom has approximately 300,000 international students, but that includes European Union students under different rules. The United States now has some 886,000 students, according to this month’s Open Doors report from the Institute of International Education.

This, then, is big business. The impact on economies is both direct, through fees and visa costs, and indirect across a range of required services: accommodation and property, food, service support, travel and a host of others.

An integrated approach

Given the obvious impact on the economy, it might be imagined that governments around the world would be alive to the need for an integrated approach to the development of this growing market and to the need to make life easy for prospective students.

Perhaps predictably, though, this is not the case, even in controlled states like Singapore. There is a growing tension there about the amount of government funds being allocated to entice international students into what is a high cost location while there is a perception that local students pay higher fees than in most jurisdictions.

Perceptions are always important in these circumstances, and not always accurate.

In Australia, for example, there was for a long time a public perception that every international student took a place that should have gone to an Australian. That was never so, international students were always in addition to local load, but public perception had it otherwise, and that led to political sensitivities.

Singapore and New Zealand share one thing in common, however, that makes them more proactive than other major enrolling countries.

In Singapore there has been a practice of bonding international students to work in the island state for three years after graduation. The prospect of a job and income-earning capacity helps offset the prospect of the high fees to be paid (where they are not supported by the government, the current bone of contention).

New Zealand has a similar approach: each graduating international student has the possibility of work rights. This is at a time when most other major receiving countries are trimming back on those rights.

An opportunity?

In one sense, that points to a major dilemma for many governments. Put crudely, do they approach international student recruitment as a temporary cash flow opportunity, or see it as a genuine opportunity to build national capacity?

It is at that point that the major stumbling block arises in the creation of a truly integrated approach to international student education.

The United States provides an excellent example. After 9/11, it was soon evident that international postgraduate student recruitment was in sharp decline.

Sharpened security arrangements and tighter visa review rules started to bite into recruitment numbers, representing serious intellectual as well as economic loss. It was 2010 or so before that slide began to correct, and even then challenges remained.

Similar terrorist incidents in the UK, some involving foreign students as well as home-grown ones, saw similar intake tightening. But the UK also demonstrated and continues to demonstrate how domestic political imperatives can have a major impact on international recruitment patterns.

International students are extremely price sensitive. For a while, the UK gained an advantage over Australia, for example, because the high value Australian dollar made UK fees look reasonable and, all other things considered, most international students see more prestige in studying in the UK than Australia.

Given that advantage, though, the UK handed it back by allowing British universities to charge much higher domestic fees. That in turn drove up international fees. There are times when the settings on these policy decisions seem not to be taken with the full possible consequences clearly in mind.

The UK aggravated that by its approach to international education visas. This was complicated. The Cameron government came to power, among other things, on a commitment to wind back immigration.

For reasons still unfathomable, the government then decided that international student visas would increase in number (because of the potential economic impact). But student numbers would be contained inside a shrinking total immigration ‘bubble’ aimed at reducing overall immigration numbers. At best it was difficult to explain, at worst impossible.

That was compounded by the then UK Border Force’s arbitrary cancellation of over 2,000 international student visas at London Metropolitan University, and it ordering those students to leave Britain within a week. It took months to sort out a mess that did untold damage to the UK’s educational image and advantaged rival countries.

This all demonstrates that governments around the world face a major problem in protecting and developing a lucrative and important economic driver.

Rapidly growing international demand and a desire to meet that demand is one thing. Balancing all the internal considerations and demands in order to deliver seamless services to incoming students is quite another.

Any government that gets it right will be onto a real winner.

* Brian Stoddart is emeritus professor at La Trobe University in Melbourne, Australia, where he served as vice-chancellor. He is a distinguished fellow at the Australia India Institute at the University of Melbourne and an international consultant on higher education reform and development. He is also a published crime fiction writer.