Almost half of Australia's 45,000 foreign students hope to remain in the country as immigrants after completing their courses, according to a survey by a team of five academics.
The team surveyed more than 3,000 international students and found that most were attracted to Australia's lifestyle and believed it offered better employment prospects and more social freedom.
Students said they wanted to stay because of the happy times they had had while studying, the friends they had made and, in some cases, the relatives already living in Australia.
In a report on the survey, the academics argue that the rapidly increasing number of overseas students coming to Australia for secondary, tertiary and language studies could constitute a significant source of skilled permanent migrants.
But they also warn that if large numbers of foreign students stay on or migrate back to Australia after returning home this could have significant educational, economic, and social implications - both for Australia and the students' home countries.
The report was prepared by Drew Nesdale and colleagues at three universities for the Bureau of Immigration, Multicultural and Population Research. It says that educational experiences were the key factor for most university students in deciding to migrate. However, nearly three out of four students found prejudice and discrimination to be a major problem.
Overseas students make ideal migrants because they have the language skills and recognised qualifications, the report says. In addition, they have good job prospects and the resources to support members of their families.
A pool of such qualified people could be manipulated to alleviate skill shortages in Australia, "topping up the supply of graduates" without causing unemployment among Australian graduates.
In a controversial suggestion, the academics urge the federal government to play a greater role in the marketing of export education and the selection of students. This would give Australia greater control over the number, sources and labour market impacts of return migrants.
"The possibility of channelling a group of highly skilled, relatively wealthy, industrious young students who have useful international connections, to becoming permanent Australian residents would appear to be a planner's dream," the report says.
"In this scenario, tertiary education could become an arm of immigration policy and, with proper monitoring of undergraduate selection, graduate change of status and alumni locations, the pool of desirable immigrants could be known in advance and contacted easily anywhere in the world."