‘Unjustifiable risk to the nation’: Elite universities lash student caps

Elite universities have attacked the government’s plan to cap international students as an “unjustifiable risk to the nation” and warn tens of thousands of enrolments for next year are in limbo.

The Group of Eight – which includes the University of Sydney, Melbourne University and the University of NSW – has accused the federal government of creating a lasting legacy of political interference in the $48 billion higher education export market.

Top universities have warned that curbing international students would create multimillion-dollar holes in their finances.Credit: Brook Mitchell

In a submission to the government’s draft framework, the universities opposed the international student cap for public universities and TAFEs and instead proposed growth targets for individual institutions.

They criticised the government for introducing a bill into parliament, describing the move as a breach of good faith during the consultation process.

“The central ‘command-and-control’ approach to international education ... represents an unjustifiable risk to the nation,” the submission said.

“There is no evidence the approach will work – and significant evidence that it will fail.

The submission said the plan could not be implemented by the proposed 2025 date and would cause “significant financial damage” to the higher education sector and the Australian economy.

“It is founded on a false conflation of international students and Australia’s housing crisis. And it will leave a long-term legacy of political interference in a $48 billion export industry.”

The comments mark a significant escalation in the rhetoric of the influential group, signifying deep concern within the universities, which are highly reliant on international students to prop up teaching and research.

The eight universities control more than a quarter of the country’s lucrative international education market.

The government in May announced it would cap international student numbers as a key mechanism to halve migration by 260,000, in what was a dramatic intensification of its efforts to stem an influx of foreign students.

Enrolments in the sector were steadily increasing year-on-year before the COVID pandemic. Student numbers plummeted after border closures but quickly rebounded after the Morrison government introduced cheaper visas and better working rights to help stem workforce shortages.

At Sydney University, the largest educator of foreign students in the country, 46 per cent of its cohort comes from overseas, and it relies heavily on the Chinese market. Among its postgraduate degrees, most students are from overseas.

In 2023, it made more than $1.4 billion from foreign students and was the only NSW university to report a surplus.

At the University of Melbourne, 45 per cent of its students were from overseas in 2023, up from 41 per cent the previous year.

The opposition has also promised to cap foreign enrolments should it win the election, and leader Peter Dutton singled out Sydney University for its international student numbers.

‘A really important asset’

Education Minister Jason Clare said the government intended to set limits for every university, higher education and vocational education provider that educates international students.

“This is a really important national asset, and we need to ensure it maintains its social licence,” he said. “We are consulting the international education sector to make sure we get the design and implementation of these critical reforms right, with implementation to begin in 2025.”

Group of Eight chief executive Vicki Thomson said the group was happy to discuss managed growth across the whole sector with the government.

“It’s a very easy political hit to just say cut student numbers as part of a broader migration strategy,” she said.

“What the government has failed to do is address to us why would you go so hard on our universities when all of the evidence points to the absolutely devastating effect this will have.”

Thomson said should the caps be implemented, the 2025 start date would be unworkable given the long lead times in the recruitment of international students.

It estimated that 54,000 offers have already been made for 2025 across the eight universities, and about three-quarters of full offers and acceptances were registered by the end of November.

“We are really concerned because we’ve got offers in to students on good faith that they would be able to potentially study in Australia from January 1 next year,” Thomson said.

“We don’t know if that’s the case now because we’re dealing with a great level of uncertainty.

“You don’t just find hundreds of millions of dollars in your budget as a replacement within several months, that just doesn’t happen.

“I’m not sure what the government thinks we are going to do if this goes through in the way that they are suggesting.”

‘Overreach’

The Group of Eight said a 10 per cent reduction in international student numbers would put almost $430 million of research grant funding in jeopardy.

The Group of Eight’s position puts it at odds with Universities Australia – the peak body for the sector – which has not opposed the cap for institutions but said it should not be applied on a course level.

“A ministerial intervention at the course level is overreach and would have serious consequences for established practices of institutional autonomy, existing regulations and student choice,” Universities Australia’s submission read.

Universities Australia has warned that 4500 jobs could go as the government’s international student clampdown leaves a $500 million hole in their budgets.

S&P Global Ratings last week released a report warning that Australian universities would slide down rankings and be put under financial strain by the proposal.

“If enacted, the legislation would crimp operating margins, choking funding for research and halting the advance of Australian tertiary institutions up global rankings,” it read.

Start the day with a summary of the day’s most important and interesting stories, analysis and insights. Sign up for our Morning Edition newsletter.