What international student caps will mean for Australian universities

Former NSW Education Minister, Prof. Verity Firth, hit the nail on the head in her comments to this week’s ACSES Student Equity Symposium.

Addressing the Symposium in her role as a member of the government’s Implementation Advisory Committee (which will provide advice on the design of the new Australian Tertiary Education Commission and the new Managed Growth Funding System for higher education), Prof. Firth cautioned:

And she is absolutely right.

Of the 29 public universities which have so far published their 2023 annual reports, just 1 in 3 reported an operating surplus.

Furthermore, 27 of the 29 achieved their 2023 results (positive or negative) on the basis of an increase in international student revenue, and the average increase in international student income was 19% across all 29 universities.

So even with most universities experiencing a substantial annual increase in international student revenues in 2023 – most also reported a deficit.

That is in part because, at the same time that international student fee revenues were increasing, many universities were having to increase their remuneration rates for casual and contract staff (to address the historic wage underpayment issues in the sector), and all universities have been adapting to the former government’s Job-ready Graduates funding which reduced their average level of funding per domestic student.

Against this backdrop – the government has a stated intent to limit international student numbers (in line with a priority to reduce net overseas migration) and it intends to do so, according to the Draft International Education and Skills Strategic Framework by introducing limits on international student numbers at all providers, including public universities, at potentially the course and campus level.

So the question has to be asked – how will universities deliver for domestic students when these international student caps are imposed?

In the current climate (with immigration a negative political issue) the government will not set limits for international students above current enrolment levels, given their stated aim is to reduce student numbers – so even assuming optimistically that international student numbers in universities remain relatively stable (and enrolment cuts are focussed on private VET providers), without extra government funding it is still difficult to see how most universities will be able to operate profitably?

And that is before the sector gets to grips with another review of research funding – but still no replacement yet for the basic research funding which was removed from Commonwealth Grants Scheme funding when the Job-ready Graduates reforms were introduced.

Unsurprisingly the removal of this basic research funding has impacted some universities more than others.

Those with lower levels of research output typically face greater difficulties in maintaining the excellence of their research across the fields of education they offer… and hence without additional government funding, and with limits on their international student numbers, they will be under pressure to cut courses (a) to directly reduce their costs and (b) to make it easier to maintain their levels of research excellence across a smaller number of fields of education – allowing them in turn to continue to maintain their status as a university, rather than being re-classified by TEQSA as a teaching-focussed university college (because they no longer meet the research excellence requirements of a university).

Yet the potential for cuts to university course offerings and the financial state of some Australian universities will not be on the minds of parents and students as they engage with the political debate about ‘too many international students/too many migrants’.

And in part that is because the sector is still largely speaking to itself, and not to parents and students, about the combined impact of these policy reforms.

This is in marked contrast to the public debate in the UK about the insufficient levels of government funding for their public universities and what impact any further reduction in international student numbers would have on the sector.

One wonders what Australian parents and students might think about further limits on international student numbers if they understood the current state of the finances of their local public university, and the likelihood of courses being cut (at a minimum) as a means of making ends meet?