Charging international students more could mean less for Australian universities

The last decade has left Australian universities vulnerable. Constant changes to policy, funding uncertainty, and government investment in research and development falling to its lowest share of gross domestic product has made planning for the future difficult for any major institution.

They’re being asked to do more with less, and the changes are not done yet.

Australia has long been known for its world-class universities, attracting hundreds of thousands of domestic and international students seeking quality education.

By 2050, it’s expected that the number of Commonwealth supported students enrolled in Australian universities will double to 1.8 million.

But while funding models are evolving, rising inflation is eroding the value of tuition fees meaning Australian higher education institutions are in the middle of a crisis.

The Australian Universities Accord has released its first Interim Report outlining a vision for the future of Australia’s higher education system. The report’s found universities relied on volatile revenue streams, lacked transparency and needed a funding redesign. It cautioned funding stress was driving the continued growth of international student numbers. “Australia’s higher education system is incentivised to maximise the intake of international students and produce large student cohorts. This can be detrimental to the student experience for both international and domestic students,” it said.

On the back of the interim report the Education Minister, The Hon Jason Clare MP announced massive changes, many of which received a near universal embrace. His idea about university funding, however, sparked controversy.

Minister Clare proposed a levy on international student fees in order to create a fund to be used to cover the shortfalls in tertiary education funding. While the levy might seem like a viable revenue generation strategy, some higher education leaders are concerned it could have far-reaching effects on higher education in Australia. Additionally, given the majority of international students enrol in Group of Eight universities, such a levy has raised eyebrows within the group, given their substantial investment in attracting international students.

Fees from international students are the second-largest contributor to overall university revenue and were worth about $8.7 billion in 2021.

Speaking with our higher education customers, they say the role of international students is paramount to Australian universities, not just for revenue generation, but cultural diversity, global reputation, research and innovation.

International students already pay premium fees to attend higher education in Australia. The proposed levy has the potential to reinforce negative perceptions that international students are cash cows and Australian universities are money-driven institutions prioritising profit over education, according to some. This could deter and discourage prospective students from seeking education in Australia, sending them to the UK, North America or Europe instead.

A decline in international enrolments would mean reduced income for institutions, hindering their ability to invest in research, infrastructure, and academic programs. This has the potential to impact the quality of education and facilities, affecting both local and international students and university rankings.

International students provide an exchange of ideas, culture, and perspectives that enrich the overall learning experience. Losing out on this talent pool could also have long-term implications for research advancements, technological innovations, and overall economic growth.

Part of TechnologyOne’s core mission is to transform business and make life simple for our customers. Our OneEducation SaaS ERP solution has been built with, and for, education institutions, to support financial sustainability, student wellbeing, and digital disruption, and enable education providers to adapt to the changing landscape to be able to do more with less.

Our integrated software solution enables universities to operate more efficiently and reduce costs through end-to-end management of operations.

But it can only do so much.

Just as our integrated software solution prioritises the student experience, there needs to be a more sustainable model for higher education funding so universities can continue to put students first and manage financial pressure on international students who are already struggling with the cost of living in Australia.

From reduced diversity and inclusivity to potential financial constraints and negative perception, the unintended consequences of a proposed levy on international student fees could be significant and long-lasting. Preserving the reputation of Australian universities as inclusive and globally respected institutions should be a priority to maintain a strong and vibrant higher education system. Emphasising quality education, collaboration, and fostering a diverse and welcoming environment will benefit all students, local and international, and secure Australia's position as a leading destination for higher education.