$1.1 billion black hole: Unis brace for loss of tens of thousands of students

Australian universities are bracing for a $1.1 billion revenue black hole next year with 63,500 fewer international students expected under the government’s plan to slash foreign enrolments.

Economic modelling commissioned by Sydney University showed the proposed international student cuts could cause a $4.1 billion hit to the Australian economy and cause 21,922 direct and indirect job losses in 2025.

New modelling shows universities will face a $1.1 billion shortfall next year.Credit: Oscar Colman

Universities warn that international fees prop up domestic enrolments and research, contributing more than $10,000 to the government shortfall in one local medicine student’s degree funding.

In its submission to the government’s proposed caps legislation, due to be debated in parliament this week, Sydney University said the modelling was conservative as they represented the impact on the economy in 2025 alone.

“It should be obvious that any rapid and large cuts to international numbers will have an immediate impact on the viability and competitiveness of Australian universities and other providers,” it read.

The modelling, completed by ACIL Allen Consulting, also does not include additional negative impacts on the labour market that could occur due to lower numbers of skilled workers available to all sectors.

The figures assume there would be a 30 per cent reduction in student visas next year, which would cause universities to lose $1.1 billion in revenue with 63,500 fewer international students enrolling in 2025.

Sydney University – which made more than any other institution in the country from foreign fees last year – said international students cross-subsidised its teaching of domestic students where costs exceed government funding.

“For example, for every full-time Australian citizen who studies medicine or veterinary science, the University of Sydney needs to find more than $10,000 in additional funding each year to cover the full cost of teaching and training each of them – funding sourced largely from international student fees,” its submission read.

The government in May announced it would cap international student numbers as a key mechanism to halve migration by 260,000. The dramatic intensification of its efforts to stem an influx of foreign students caused fierce opposition from the higher education sector.

Some universities are hoping any legislation would lead to a fairer distribution of foreign student fees, currently concentrated in institutions like Sydney University, Melbourne University and the University of NSW.

Victoria University said the bill should address the disproportionate and unbalanced distribution of international students across the sector, noting one-third of all foreign enrolments were at five universities in Australia.

Regional Universities Network, which represents seven institutions, said regionally delivered courses should be exempt from total enrolment limits and automatic cancellation penalties for exceeding caps.

“Given the inconsistent and unpredictable nature of fluctuating enrolment patterns in thin regional markets, and recognising the low-risk, high-quality characteristics of public tertiary providers, RUN argues that exempting regional universities from this automatically cancellation, is not only good public policy, but also an acknowledgement of the changeable circumstances in which regional universities operate,” its submission read.

Sydney University’s submission said the enforcement of a proposed suspension on any university which exceeds its cap would cause chaos in the system, requiring them to renege on offers and acceptances. It also hit out at the unprecedented level of government interference, with the bill to allow control of enrolments at a course level.

“It should not be the legacy of one government to leave such powers with unfettered licence for potential use for unintended purposes by their successors,” it said.

Universities Australia says institutions are already facing a $500 million shortfall in funding this year thanks to the current visa crackdown.

“Universities Australia urges the government to give more careful consideration to these
reforms to ensure there are no unintended consequences,” chief executive Luke Sheehy said.

“A longer consultation period would allow time to consider the full policy suite of domestic and international reforms proposed across government and allow newly imposed regulations to take effect before further decisions are made.”

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