Australia’s vice-chancellors are not usually given to wild alarmist cries but the imminent collapse of the export education market has caused consternation in their ranks. With the slump in the number of Indian student enrolments spreading to other nationalities, and especially to China, vice-chancellors have urged the federal government to take immediate action to protect an industry said to be worth $18 billion a year to the national economy.

News that the nation’s biggest university, Monash, was facing a $45 million drop in revenue next year “because of a 10 per cent fall in overseas student numbers” and with the prospect 300 jobs being slashed, has added to the sector’s sense of alarm.

In an email to staff, Monash vice-chancellor Professor Ed Byrne said fees from foreign students accounted for more than 20% of the university’s annual income, “so the drop will have a significant adverse impact upon the university’s budget”.

Students from India constitute the second biggest group of foreign fee-payers in Australian higher education but are still well behind those from China. In August, 77,000 mainland Chinese were on campus here compared with 21,100 Indians. Last year, universities enrolled 64,000 Chinese – a 20% rise on 2008 – while the 27,500 Indian enrolments represented a mere 0.7% increase except that now their numbers have started falling.

More than falling, Byrne says flatly that the Indian market “has dried up altogether” for Australian universities. He puts the blame on the widespread coverage in India of the spate of attacks on students in Melbourne and Sydney.

But far worse for Monash and other universities is the downturn in the China market. If that becomes a rout like India, some universities could face bankruptcy. Yet they have been warned for years their reliance on foreign student fee income could place many in financial danger.

Few suspected, though, the federal government would cut back on the market’s continued rapid expansion by restricting student visas and curbing skilled migration. Responding to widespread public concern about increasing migrant numbers before the election, the government announced changes to its skilled migration program in April and imposed strict new regulations on foreign students applying for permanent residency.

Tens of thousands of overseas students have used Australia’s education system to gain easy access to the workforce, with dodgy vocational education colleges springing up to offer dubious courses in cooking and hairdressing.

The government crackdown forced dozens of the colleges to shut and now universities have been caught up as well in what vice-chancellors are calling “collateral damage”. Once Indian students realised that studying for an Australian business or commerce degree –the most popular courses – no longer offered them automatic permanent residency, they began turning away in droves.

Byrne says the situation is different for students from China and other south-east Asian countries – Monash’s main markets. They not only face outlaying far more to study here than ever before because of the rising Australian dollar but must now also prove they can afford to meet the costs of three years living expenses in Australia and three years tuition fees as well.

“The view from our agents in south-east Asia is that this is the big factor [in the downturn in student visa applications], plus the fact that Canada, the UK and US are far more active in recruiting,” Byrne says.

*Tomorrow: tracking the downturn across the higher education sector.

Peter Fray

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