Setting international student caps – would a 70:30 ratio work?

In an interesting interview on Sky News on Sunday, the Education Minister, Jason Clare, was asked about international student caps.

Some of the highlights of the Minister’s comments on international education included the following:

1. The Minister recognises that the highest levels of post-pandemic growth in enrolments have been in VET (the same point I made in a recent subscriber update):

2. Here’s what I wrote at the end of May (and yes I am less formal in my subscriber briefings than I am writing here on my website)

3. When pressed about the number of international students a university should enrol – the Minister avoided commenting on individual universities – but did point out that “across the board” the ratio of domestic to international students is “about 70/30” and then went on to explain that “a lot of universities” have told him they would prefer a cap on international student numbers.

4. The Minister also described these new powers, to set caps at the course level, as being a “reserve power”. There was no discussion in the interview as to whether the government will look to use their powers to set caps at the campus level.

A number of people on social media, including the always insightful Bretlyn Bailey, Deakin University’s Director, Business Performance Insights (on Twitter), reflected on the Minister’s comments and pondered what they might mean for the sector, especially the reference to the 70:30 mix.

Which got me thinking: what would be the impact if the government imposed an international student cap for each university which limited their international enrolments to no more than 30% of their student cohort?

Firstly if the government is considering this option, then I don’t think they would look to introduce what would essentially be a retrospective caps on existing student numbers, eg asking international students enrolled at the University of Sydney to pack their bags and shift across town to Macquarie University or UTS (so that the University of Sydney could reduce its proportion of current international students to 30%).

But … if the government was to impose a limit of 30% international students in each university’s commencing student cohort in 2025 – then superficially here’s what the 2022 data tells us about how each university would be impacted (and note that obviously enrolments of international students have increased since 2022 but sadly this is the latest publicly available data):

Given the post-COVID state of the sector in 2022, the data is also somewhat ambiguous.

Some universities, eg the University of Sydney, rapidly expanded their offshore delivery during COVID and have subsequently welcomed back most of their international students to study on campus. Other universities, eg Monash University, RMIT University, Swinburne University and others with high levels of international enrolments, have longstanding offshore branch campuses.

Unsurprisingly though, the Group of Eight (with the exception of the University of Western Australia) would be most impacted by any decision to limit international students to no more than 30% of a university’s future (onshore) student enrolments.

How might universities respond?

If caps were implemented in this manner (ie as a proportion of total enrolments rather than as a specific number for each university), then we might expect some universities to look to grow their domestic enrolments.

But with only 28.8% of 15-24 year olds engaged in full-time study in 2023 (compared to 34.3% in 2019), demand for undergraduate study is down across the sector, and despite the targets set by the Universities Accord Panel for increased participation in higher education, it looks like it will be difficult for some public universities to significantly increase their domestic undergraduate student numbers.[1]

That then leaves their domestic postgraduate programs (where most students finance their own studies) as the focus for growth.

In which case we might expect to see more competitively priced coursework Masters, Graduate Certificate and Graduate Diploma courses on offer from some of the Group of Eight and other universities with high numbers of onshore international students, which in turn might impact demand for postgraduate programs at other universities (where fees are currently lower than at the Group of Eight universities).

If universities did increase their domestic postgraduate student numbers, then the government could easily find that overall international student numbers would increase despite the cap – as those below the 30% cap would be allowed to enrol more students and other universities which expand their domestic postgraduate enrolments could also then expand their international enrolments.

Obviously a move by some universities to expand their domestic postgraduate enrolments might result in a decline in demand for postgraduate study at other universities. Meaning that the most impacted universities would be likely to be those which already have high numbers of international students, and which currently have lower than average levels of domestic students enrolled in their postgraduate courses (eg Charles Darwin University, CQU, Federation University).

The 2024 Budget promised a new Needs-based funding model to support more regional students (and those from other under-represented groups) but until the quantum of funding is known (and allocated), the pressures facing many regional universities could be expected to continue to intensify in this kind of approach to setting caps.[2]

What about private universities like Bond University and Torrens University Australia?[3]

Based on the 2022 onshore international student data, if the government moved to a 70:30 cap, Bond University would be able to enrol some additional international students, whereas Torrens University might not be able to grow their international student enrolments without also growing their domestic student cohort.

It is difficult to know how a 70:30 cap might be imposed on the private VET and non-university higher education providers which focus exclusively on international students.

As for the TAFE sector – with all of the focus on domestic Fee Free students in recent years and a number of major organisational restructures in many jurisdictions, TAFE’s share of international students is very low and there would be plenty of room for TAFE Institutes to also increase their enrolments (further increasing overall international students in Australia despite caps having been introduced).

Where to from here?

Given the above complexities and the potential for a cap based on a 70:30 ratio to have the unintended consequence of increasing international student enrolments – I think it is unlikely we will see this method used to set provider caps. It does not seem to be workable and could deliver exactly the opposite of what the government intends…

But the reference by the Minister to the current 30:70 international-domestic student split might still be worth paying attention to.

The government may well be exploring introducing specific caps for each institution which are the equivalent of 30% of a provider’s current onshore enrolments/or their commencements in 2023…

And if that were to be the case it would be enormously damaging for some institutions.

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[1] Undergraduate domestic enrolments will also be strictly capped under the new Managed Growth Funding System for Commonwealth Supported Places announced in this year’s Budget.

[2] Federation University is currently progressing with plans to make 12% of its workforce redundant before the end of the year.

[3] The author is a PhD candidate at Torrens University Australia