Higher education funding and international students

Published on my last day working for the Parliamentary Library, Hazel Ferguson and I authored a quick guide to overseas students in higher education. The document is a short summary of key figures and legislation covering overseas students who study at Australian higher education providers (this deliberately excludes the VET and ELICOS sectors).

To me, the most interesting figures are those intersecting funding and overseas students. I’ve modified Table 6 from the publication below, by including the last column:

Total revenue ($’000)Overseas student revenue ($’000)Overseas student revenue divided by total revenue (%) Overseas student revenue growth divided by total revenue growth (%)
2008$18,955,909 $2,946,127 16%
2009$20,468,862 $3,414,687 17%31%
2010$22,158,466 $3,881,656 18%28%
2011$23,658,742 $4,124,064 17%16%
2012$25,210,033 $4,134,768 16%1%
2013$26,332,964 $4,290,808 16%14%
2014$27,751,858 $4,741,973 17%32%
2015$28,609,979 $5,349,879 19%71%
2016$30,147,079 $6,249,049 21%58%
2017$32,028,091 $7,457,002 23%64%

There is no secret overseas student numbers have been increasing steadily in recent years, resulting in revenue growing from $2.9b to $7.4b over the decade from 2008 to 2017.

Two things stand out to me from these funding figures. The first is the proportion of total revenue generated from overseas students is growing for the higher education sector, particularly from 2014. But the magnitude of the change, from the 16-18 per cent to 23 per cent in 2017, is not astronomical.

The second trend is more important. Total revenue growth is becoming more dependent on overseas student revenue growth. In the period 2015-17, 63 per cent of all total revenue growth for higher education in Australia was accounted by growth in overseas student revenue.

Clearly, the marginal dollar in additional revenue for a university depends more heavily on overseas students today than in the past. I’m no higher education expert so I do not know what this means in terms of teaching and research.

But in relation to overseas student trends, there seems to be a sense in the air Australia could be approaching a peak in terms of growth and aggregate numbers. I don’t share this position (for reasons I’ll document in the future) however it appears pretty clear any future slowdown of revenue growth from overseas students will be considerably more difficult to deal with for universities today than it was in the past (such as the 2012 calendar year).

Lots of people know this topic better than me. But the one point I’d like to make is the myth that the median overseas student wants to study in Australia primarily because they are motivated by permanent residency. Figures from the Department of Home Affairs show about 16 per cent of overseas students (all types, not just higher education) transitioned to permanent residency between 2001 and 2014. This means the vast majority did not. Further, it is becoming more difficult to make the transition given recent government policy change to reduce the number of permanent visas available and tighten eligibility requirements.

People can infer whatever they want from this but to me, it feels like Australian universities are responsible for both the successes and failures when it comes to attracting overseas students. Changes in visa policy are probably only responsible for very marginal effects.

One thought on “Higher education funding and international students

  1. The fact that only 16% of international students migrate is not connected with the motivational factor of the possibility that they could migrate. Further, the weasel word is whether they are PRIMARILY motivated by migration or it is a SECONDARY but still critical motivation to the decision to study in Australia or Canada etc. I cannot see how the 16% figure discounts the alleged myth of the connection between study and migration. From where I sit, the possibility of migration is a great pull factor and the Government is not going to sever the link for the fear the bottom will drop out of the market. Instead it will continue to promote the link but hypocritically disavow responsibility when the students pulled in by the marketing crap of the education agent sector cannot in fact apply for permanent residence.

    If you disagree Henry, give us more evidence based policy.

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