International students have become a major source of revenue for Australian universities but also a source of structural and ethical concern
Introduction
International students have been a major source of revenue for Australian universities since the 1990s, with their contributions growing significantly over time. Pre Covid in 2018-19, international education generated AUD$37.6 billion, making it Australia’s third-largest export after coal and iron ore.
Successive Commonwealth Governments seized on this to reduce their funding of Australian Universities Back in 1990, the Australian government funded around 80% of university costs, but by 2019, this had dropped to 33.5%, leading universities to rely more on international student fees. In 2018, international students contributed AUD$9 billion, making up 26.2% of total university revenue.
At the same time these same Governments pushed for higher student enrolments. Their business plan was simple, fund higher education on the cheap by taxing overseas students and cutting Government contributions. To some extent, because Universities could now pay staff market loadings and other benefits, the Universities were willing partners in this expansion of international students, without planning for unexpected interruptions in the growth of the trade in students. The Covid interruptions revealed the excessive leveraging Universities had placed on international student revenues. The sandstone universities with their bursaries and relative prestige were in the main, able to ride this out but smaller and regional universities were hit hard
The University of Central Queensland saw a 46% decline in revenue due to the loss of international students and Deakin University saw 100 staff retrenchments and the Latest financial report from the University of Tasmania recognised The University relies on international student revenue to cross-subsidise research and capital investment, a model that may become unsustainable due to Australian government policy reforms on student visas and enrolment caps. (https://www.parliament.tas.gov.au/committees/joint-committees/standing
More dramatically, the financial review observed:
“University professors warn of mass job cuts of 100,000 in higher education and others talk about “creative destruction” as they react to the crisis over international student enrolment”
How the dependant are the universities on overseas student revenue
The answer is very dependent . Table 1 sets out the significance of international student fee revenue to some of the major Australian universities 2024
Table 1 Dependency on International Students-Selected Australian Universities 2024
| University | # of total revenue from international students | Notes |
| University of Sydney | 44% | Highest reliance on international students who make up 43% of enrolments |
| Monash University | 33.4% | Second highest dependency |
| University of New South Wales | 32.4% | Also, heavily dependent |
| University of Queensland | 30.6% | Seventy-two percent of student fee income comes from international students |
| University of Melbourne | 30% | High international enrolment but lower revenue share |
Table 1 shows all the above are at least 30% dependent on international student fee revenue. Data on the smaller Universities is not easily available but for institutions such as the University of Tasmania the percentage has been put as high as 44%
Why did they allow this dependence to grow?
In some sense University administrators were caught between growing domestic demand, reductions in Government funding. and the increasing costs of sourcing staff with international reputations in research. They were also caught up internally by an increasingly corporatist view of the purpose of a university. International student money was in some ways “windfall money” which could be used to pay staff loadings, funds expansion in programs and buildings, in essence, empire building . Macquarie University Professor Tom Smith argues
Years of reforms to the Australian higher education sector have shifted focus from equipping our young adults with a profession, pursuing knowledge, and advancing society to tertiary education as a product to be traded on the open market,”
Coinciding with the increased significance in revenue sourced from international students there was also increased concentration in the location of these students Table 2 shows the top % student origins for 2024
Table 2 International students in Australia by percentage 2024
| Country | % of Australia’s international students |
| China | 22 |
| India | 16 |
| Nepal | 8 |
| Philippines | 5 |
| Vietnam | 4 |
source: https://www.studying-in-australia.org/international-students-in-australia-statistics/
China alone accounts for more than 20% of the total intake and for disciplines such as commerce the enrolments in the sandstone universities are upwards of 50% Chinese. In essence, collectively, Australian universities ignored two basic rules of sound commercial practice, over reliance on one form of income and over reliance on one group of customers
Some Consequences
While this growth has brought substantial economic and cultural benefits, it has also introduced new challenges, particularly in the context of government policies, institutional capacities, the commodification of education, ethical concerns, and the welfare of students . Specifically, these include ,
Commodification of Education
Australian universities have increasingly treated international students as revenue sources rather than learners. This financial dependency risks prioritizing profit over educational quality. It raises ethical questions about whether universities are compromising academic standards or student support in pursuit of financial gain.
Moral Hazard
An indication that this may be happening occurred at the University of Tasmania where more than 50 % from 919 international students did not do English test as part of their enrolment. Instead. their level of English proficiency was assessed via the now scrapped “Other Mode of Instruction” (MOI). Which assumed a student was proficient in English if they had previously learnt at an institution which taught in English. It did not require them to sit a test to prove that proficiency. The review found students accepted based on MOI were more likely to fail. (https://www.abc.net.au/news/2019-07-11/university-of-tasmania-international-student-entry-reviewed/11299896)
Equity and Access for Domestic Students
The influx of international students has sometimes led to concerns about reduced access for domestic students, particularly in high-demand courses. While international enrolments help fund university operations, there is an ethical tension when local students face increased competition or when resources are disproportionately allocated to fee-paying international cohorts.
Academic Freedom and Institutional Integrity
The financial pressure to attract and retain international students may influence academic decisions, such as curriculum design or grading standards. There are concerns that universities might avoid controversial topics or lower academic rigor to maintain high satisfaction scores and retention rates, which could undermine academic freedom and integrity
Short term Planning
The over-reliance on international student fees is ethically questionable from a governance perspective. It reflects short-term financial planning rather than sustainable funding models. The COVID-19 pandemic exposed how fragile this model is, with many universities
A better way
Visiting Stanford economics professor Robert Leeson believes Australian universities can adapt to remain world competitive without reducing the ability to service overseas students. He advocates a form of structural adjustment called creative destruction (https://www.afr.com/work-and-careers/education/universities-might-have-to-accept-creative-destruction-20200419-p54l3q)
This is a form of structural adjustment by which Universities would shed some of their empire building aims, trim excess staff (is it possible they could cope with only 2 PVCs rather than four?)
Leeson argues
“Our universities could shrink in geographic size while competing on the international stage for customers. Many middle-management university jobs might be creatively destroyed – and resources should be made available to assist ‘change management’.
Conclusions
The involvement of international students in Australian Universities has grown substantially since the initial “Columbo Plan” student scholarships of the 1950’s and 1960.s, bringing economic and cultural benefits to these students and Australian society in general. However, it is arguable that the dependence of Universities in Australia on overseas student revenue has reached unhealthy and unsustainable levels. When major institutions such as the University of Queensland currently generate 72% of their student income from overseas students. Financial dependence inevitably generates moral hazard. A solution to the problem would be for the Commonwealth Government to raise its funding levels for universities especially for research, but this is unlikely. Instead, the universities follow Leeson’s ideas of creative destruction and downsize or find corporate and philanthropic sources of finance to reduce their dependence on the revenue from international students
