The pitfalls for Australian universities of exporting education

An Emirati student arrives at the building of the University of Wollongong in Dubai. Picture: AP

Vice chancellors complain the Albanese government’s proposed caps on full fee paying overseas students will reduce the revenue they need to fund research and subsidise expensive courses for locals.

They should have seen the quotas coming.

In 2021, then education minister Alan Tudge warned universities he did not want a return to what was then considered a pre-pandemic boom. In 2019, there were what was then an astonishing 758,000 international students in Australia.

Tudge warned students were let down by “the relentless drive for revenue in order to fund research”.

“Having up to 60 per cent of a classroom with international students from just one or two countries is not optimising the Australian student experience – or the international student experience,” he said.

And he wanted universities to diversify what internationals studied – too many in business, not enough in engineering, maths and health – and where they came from.

Universities ignored him – students from overseas make for easy money – and now there are 810,000 international enrolments in Australia.

So Education Minister Jason Clare has taken Tudge’s warning to its inevitable conclusion. He has a plan, for the moment stuck in the Senate, which will limit overall international numbers for all higher education and voced providers and could cap course enrolments. Clare justifies quotas, saying: “The government is determined to strengthen the integrity of the sector and ensure it maintains its social licence.”

It will come at a cost. University of Melbourne’s Nicola Phillips predicts the Clare quotas will mean $85m less revenue next year for her university, with a flow-on over the length of enrolments of 18 per cent of the international student class.

And Kent Anderson from the University of Newcastle, which has a successful export business in Singapore, warns the proposed quotas per campus could be worse than they look.

Universities commonly have arrangements with offshore institutions where students do the first years of an Australian degree at home and then come to complete their course here. Whether they are included in a university’s cap will depend on how they are defined, as new or existing students.

When Tudge signalled a ceiling on international students he suggested a way to keep the cash flowing – expand overseas. But there was a problem with his plan then and there still is. It is hard to make money. The Victorian government will kick $5m to local universities to set up overseas and avoid Canberra’s international student quotas. Now why hasn’t anybody tried that before? They have and it doesn’t do much. Despite decades of work, just 7 per cent of international students enrolled in Australian courses are outside Australia.

China, for example, is now a mature market – the aftershock of the one child policy is a natural cap on growth and the status of foreign degrees is not what it was. “Haida” – “job-waiting returnees” – is a thing. Plus, there is no appetite there for foreign universities setting up in competition with locals, not least because China is now a high status for academic research, challenging, when it is not excelling, the United States on rankings.

And even in welcoming markets it takes years to build a brand warns Dirk Mulder, publisher of international education publication, Koala News. Plus Australian cost structures in low-income countries make margins thin.

Even so, universities have long been game to have a go. Monash University opened in Malaysia in the 90s and is now starting in Indonesia (although a failure in South Africa is rarely mentioned). University of Wollongong which has had a campus in Dubai for decades is now looking to expand in Saudi Arabia. RMIT is huge in Hanoi. James Cook and Newcastle universities have campuses in Singapore. There are many more – just about every Australian university has an offshore presence, set up one way or another with money in mind.

And universities are starting to see a return on decades of work to expand into India, the only market big enough to have any chance of coming close to China. Deakin and Uni of Wollongong now have campuses teaching their degrees in a free-trade zone in Gujurat state. These are world firsts and other Australian universities are following. India’s national government is determined to expand access to high-quality education from overseas, and has overcome, at a policy level at least, entrenched opposition from academics and officials.

But India exemplifies the problem with export education. Making the sort of money that Indian students pay to study at universities in Australia is all but impossible there. For a start, there is a chasm between Australian university costs and what Indians will pay at home. And low-cost online courses are explicitly ruled out by India’s national education regulator.

International education expert Brigid Freeman (University of Melbourne) argues that the pathway model works for Australian universities in India but wonders whether it will be available when arrivals are regulated. She has a point, Clare’s quotas are not intended as a one-off but a permanent policy, to be administered by the new Australian Tertiary Education Commission.

As for setting up branch campuses, Freeman warns that even where allowed they are always expensive and expatriating profits can be difficult, which is why the University of Newcastle uses a different model in Singapore. Anderson says the campus makes a profit but it is reinvested locally, subsidising research. And the university plans to double the Singapore operation and make it a hub for students across the region. This is far from the idea of campus as colony, set up to ship revenue home – which is not a way to endear a university to governments and communities of host countries. Even when it works.

Freeman says research on international campuses shows they generally do not make money and close. “The bottom line is never where people hope it will be,” she says.