Universities too heavily reliant on foreign students

Of the more than 520,000 international students enrolled in Australian universities, colleges and schools this year, nearly one in three are from China. Of these, more than 50,000 are enrolled in the nation’s universities.

Foreign students now contribute more than AU$5 billion (US$3.7 billion) annually to university incomes which amounted to AU$28 billion in 2015.

Among the top institutions, the University of Sydney generated AU$479 million from foreign student fees out of a total budget of AU$2 billion that year while Melbourne University’s earnings amounted to AU$526 million in a total of AU$2.1billion.


Successive Australian governments have increased the promotion of the overseas student industry with the main focus on higher education.

This followed a worrying fall in university enrolments in 2011 and 2012, in large part caused by a tightening of the rules on the financial resources prospective students had to possess before they could obtain a student visa.

In response to objections from the education institutions, the then Labor government commissioned a former state minister, Michael Knight, to conduct an external review of the overseas student industry.

Knight recommended giving universities more autonomy over the financial eligibility rules while also offering graduates increased access to the Australian labour market. He also argued these measures were essential if Australian universities were to compete against the United States, Canada and other international competitors.

Universities were then able to decide themselves whether student applicants had the necessary financial resources to cover their fees and living expenses while in Australia.

In addition, all foreign students who graduated – regardless of their field of study – and who had enrolled after November 2011, had unrestricted rights to remain and work in Australia for at least two years.

Successive governments have given universities a powerful motive to recruit more overseas students by cutting their federal funding. Whether this was a deliberate strategy or not, universities have been forced to look for alternative revenues and most pursued the overseas student market.

Some have invested heavily in recruiting more foreign students, with Monash University at the extreme end of this spectrum by investing millions of dollars in massive construction of high-quality accommodation on its main campus in Melbourne.

Successful in attracting foreign students and fees

Financially, the overseas student strategy has been highly successful.

In 2015, Australia’s universities raised AU$5.3 billion from overseas student fees, more than the AU$4.1 billion they received from fee payments from domestic students themselves, whether upfront or via federal government student loans.

Overseas student fees provided an even greater share of revenue for Australia’s top universities because they can charge relatively high fees. As already mentioned, in the case of the University of Sydney this fee revenue was worth AU$479 million in 2015, compared with just AU$172 million from domestic student fees.

Other indicators also look good, at least on the face of it.

Foreign students generated nearly AU$19 billion for the Australian economy in 2015 when 28% of all university commencements were students from overseas. Both governments and universities argue that these enrolments are cross-subsidising university expenditure on educating domestic students and on research.

Some concerns

But there are two concerns. One is the risk of universities relying so heavily on revenue from overseas students, and the other is the deterioration in the quality of university instruction.

The risk has also to do with what universities are selling. Nearly half of all overseas students, including those from China – the main source of enrolment growth – are enrolled in business courses. This is not because of their quality but because these provide the easiest and least expensive way to obtain a degree qualification that provides access to the Australian labour market.

An added danger for universities is that all these inducements can be reversed.

In 2017, the government tightened access to post-study visas by changing short-term work visas. The rules governing foreign citizens’ purchase of Australian residential property have also been made more restrictive, a change that has particularly affected students from China and their wealthy parents.

Then there is the educational quality issue regarding the low English-language standards of many overseas students.

Chinese students, especially, struggle to get anywhere near 'proficient English', which is level seven on the IELTS test. This is the level needed for most university courses and for most professional occupations and only at level seven are overseas students likely to be able to think in English. Without this capacity, they have to translate what they are hearing in English into their first language.

Universities have not insisted that overseas students achieve this level of English proficiency either before, during or at the end of their studies. The reason is obvious: to do so would not only decimate enrolment levels and graduate numbers but also university incomes.

The Immigration Department only requires prospective students to obtain a minimum of 5.5 on the IELTS test before it will issue a higher education visa. Yet this is way short of what is required for university level studies and, although some universities specify higher minimum English levels, none require proficient English for their business courses.

The attraction of business studies for overseas students has meant that by 2015 there were more overseas students enrolled in this field than Australian students. As a result, teaching methods have had to be modified to accommodate the English language limitations of the overseas students.

This has required less focus on written and oral presentations and more on numerical and group-based assignments. It has also resulted in a marking regime in which lecturers have to ignore obvious deficiencies in expression.

Far from encouraging the kind of analytic and independent thinking that universities like to claim they promote and that employers of professional accountants are looking for, courses in management and commerce have been dumbed down.

To those inside and outside the universities, this is no secret and it has serious long-term consequences for the reputation of Australian higher education.

Dr Bob Birrell is a former head of the Centre for Population and Urban Research at Monash University in Melbourne, Australia, and is now president of the Australian Population Research Institute.