The China Student Boom and the Risks It Poses to Australian Universities report, released by the Centre of Independent Studies, argued universities have gambled on an overreliance on Chinese revenue which could see taxpayers bail them out in the event of a decline.

“I think it’s a heads we win, tails we win situation [and] the Australian government can’t afford to let the universities become financially embarrassed,” said the report’s author, University of Sydney associate professor Salvatore Babones.

“When you have no accountability, abuses are rampant”

“If this bet wins, the vice-chancellors look brilliant; they’ve expanded our research capacity, they’ve expanded, literally, the physical buildings on campus. If this bet goes bad, someone will pick up the tab.”

In the report, Babones said countries such as India and Nepal did not have enough potential students who could afford overseas education, noting all but one Indian state was per capita poorer than every Chinese province and therefore were not viable replacements.

Babones added universities had viewed international students as a permanent revenue source and used it to build long-term infrastructure projects, further exposing them to risk through debt.

Universities Australia rejected Babones claims, pointing to a recent assessment from the Tertiary Education Quality and Standards Agency, which found the majority of universities were in a low-risk financial position.

“As not-for-profit public education institutions, our universities prudently manage taxpayer funds – and have extensive expertise in doing so,” said Universities Australia chair Deborah Terry.

“Universities give constant and careful attention to future trends in student recruitment, and nurture diversity within and across regions, as part of their business planning.”

In addressing the problems, the report recommends universities be transparent in their international student cohort mix – public data on nationality breakdown per institution is not available – create plans to reduce reliance on overseas revenue, and reduce reliance on single-source countries.

The report also recommends removing “deadweight” administrative overheads, increasing technological multipliers, and increasing the pursuit of private philanthropy for research projects.

“Usually, when a philanthropist or a corporation sponsors research into a project, it’s project-based, it’s specified time frames… and when it’s over if it’s not renewed. All those contracts end and there’s very little financial risk on the university,” he said.

According to Babones, the lack of data and accountability for individual universities made it likely there were issues with providers maintaining academic and English entrance standards.

In particular, the report points to Foundation Programs, which provide international students with direct entry into university without re-sitting a formal English exam, as an area it said contributed to undermining university standards. Foundation Programs admit students on as low as an equivalent of IELTS 5.0, below the minimum 6.5 required for university entry.

“Alternative admissions routes that allow international students to circumvent English language requirements… invite[s] wilful negligence and outright abuse,” the report said.

“Australian universities are, in effect, taking actions that reduce their financial risks by increasing their standards risks. A standards-first approach to international student admissions would apply the same criteria to the graduates of paid preparatory programs as they do to all other applicants.”

“Our universities prudently manage taxpayer funds”

Foundation Programs come under different standards than higher education providers and are regulated by TEQSA. Asked by The PIE News, Babones said he was not aware of the National Standards for Foundation Programs when writing the report but said, “the fact that there’s a standards document that says it’s okay to do it, doesn’t mean it’s okay to do it”.

He also added the lack of public data around the number of students recruited by foundation providers, as well as marketing which highlighted pass rates of as high as 95%, raised questions.

“We don’t have any data on this, but they seem to be passing everybody. In a for-profit program where everybody passes, I don’t think we can be very confident in the standards being applied,” he said.

“I’m not questioning the curriculum, I’m questioning the accountability.

“I am unaware of any abuses at Foundation Programs, but I’m enough of a sociologist to recognise that when you have no accountability, abuses are rampant,” he said.

In response, Universities Australia said providers maintain high admissions standards to “safeguard quality and attract international students”.

“English language standards for international students in Australia also remain high – on par with the United Kingdom and the United States – and many universities set English standards for some courses above the minimum standards set by the student visa.”

In 2018, Nous released a report which found a “two-speed” economy had emerged between universities, noting concerns over the sustainability of the international education boom.