Tuition fees paid by international students in Australia account for almost 72% of total tuition gains from full fee-paying students* at public universities, according to a recent report by the Grattan Institute.
Entitled “University fees: what students pay in a deregulated market”, the report found that in 2013, students from overseas paid A$4.3bn to study in Australia out of a total of nearly A$6bn– a fifth of public university funding in 2013.
“International students are a vital source of discretionary revenue”
The Grattan Institute, an independent think-tank, also found that students from China make up the bulk of international student fees and the annual median fee ranges from A$21,000 to A$28,000, depending on the field of study.
As a result of the high majority of tuition fee revenue stemming from international students, there is concern that the universities are becoming reliant on it.
Andrew Norton, one of the report’s authors and higher education program director at the Grattan Institute, said that despite this concern, Australian universities “can cover their basic teaching costs without international students”.
“But international students are a vital source of discretionary revenue, which contributes significantly to the research standing of Australian universities,” he told The PIE News.
While the paper focuses on gains from full fee-paying international students and domestic postgraduates, it does not include students on Commonwealth supported places which make up the majority of tuition revenue for Australian universities.
According to financial reports of higher education providers from 2013, full fee-paying overseas and domestic postgraduates (who are not eligible for Commonwealth loans) accounted for only 17% of total university revenue.
Norton also highlights that nearly 30% of international students were from China, making it one of the largest markets contributing to this total revenue.
“Some universities are even more reliant on the Chinese market, although university leaders are well aware that changed political or economic conditions in China could affect student numbers,” he added.
Speaking to ABC News’s The World Today programme, Vicki Thomson, chief executive of the Group of Eight universities, said there is “no doubt that all Australian universities are heavily reliant, for a lot of reasons, on the Chinese market”.
As a result, she suggested that the sector should diversify its markets.
“One is the economic reason; we shouldn’t be so heavily reliant on a revenue stream from a single country,” she said, adding that students “coming to Australia want an Australian education in a diverse environment.”
“There are other issues apart from the Chinese economy which will impact on that, and that is the increased competition we are getting from other countries,” she said.
“And also the fact that the Chinese education market is a very sophisticated market itself.”
The number of international students in Australia has been on the rise, with 312,500 enrolled in universities last year, according to the report. This number is almost double what it was in 2001.
However, there is always a risk of enrolments taking a nose dive, similar to what happened in 2010, according to Norton.
“University leaders are well aware that changed political or economic conditions in China could affect student numbers”
“There is always a risk that fewer international students will come to Australia, as indeed happened a few years ago,” Norton explained.
“But in the last couple of years international student numbers have grown again, particularly for postgraduate courses.”
International education is also the country’s fourth largest export, generating A$18.1bn.
The Grattan Institute report states that “with local knowledge and more ability to demonstrate skills to employers, domestic students are less willing to pay for prestige than their international counterparts.”
It also recognised that international university students in Australia are willing to pay higher tuition fees to attend a more prestigious university.
The Department of Education and Training was cited in the report for finding that 94% of international students coming to Australia say that university reputation is a factor in their decision.
“University reputation is important because the quality of education is hard to measure, for both students and employers,” said Norton.
“The general standing of the university is often seen as a guide to the quality of graduates.”
*A previous version of this article did not clarify that the 72% gains in tuition fees were only among full-fee paying international students and postgraduate domestic students. The figures do not include revenue from students who receive government supported loans.
