Australian universities increase dependence on foreign fees

Australian universities are betting the farm on overseas students, drawing a rapidly escalating share of their income from international tuition fees.

A Times Higher Education analysis of the 2017 accounts of 10 of Australia’s 11 richest universities has found that an average of 30 per cent of their income came from overseas students, up from 26 per cent in 2016 and 24 per cent in 2015.

Four of them, including the country’s two largest universities, now obtain more than one-third of their revenue from foreign students. Topping the list are technologically focused institutions with large inner-city campuses, rather than members of the high-ranking Group of Eight network.

The analysis, based on recently released annual reports, covers the Australian universities with the highest operating revenues. It excludes the Australian National University, which is yet to release its 2017 annual report.

Australian university revenue and proportion from international student fees

Source: Annual reports of selected universities. Note: A$1=57p.

While the findings demonstrate Australia’s allure for international students, they could inflame fears that universities and the national research effort are on shaky financial ground.

Chinese students make up close to 40 per cent of foreign enrolments at Australian universities, and up to two-thirds of international students at Group of Eight institutions, and concerns have mounted that student flows from China could be impeded by diplomatic tensions.

The THE analysis found that Melbourne’s RMIT University was most reliant on foreign students, with 37 per cent of its income derived from their fees, including revenue from its branch campus in Vietnam.

The University of Technology, Sydney obtained 36 per cent of its revenue from foreign students. Its annual report notes the “challenge” of avoiding reliance on its top three markets of China, India and Nepal.

“We saw a slight decrease in our other major markets, largely as a result of higher fees,” the report says. “It appears that our positive revenue growth has had a negative impact on our international student diversity.”

Melbourne’s Monash University derived 34 per cent of its income from international students last year, up from 29 per cent in 2016 and 26 per cent in 2015. The universities of New South Wales and Sydney both increased the foreign tuition fee proportion of their income by 4 percentage points during each of the past two years.

The analysis shows that many large Australian universities are also becoming far more reliant on money from domestic students. Income from fees and charges rose twice as fast as overall revenue growth, with earnings from foreigners rising faster still.

Most universities have also increased the international proportion of their enrolments. RMIT recorded the highest overseas share, with foreigners making up 45 per cent of its student body.

Institutional leaders said that overseas enrolments enriched campus life and contributed to a “diverse and robust” learning environment. They stressed efforts to diversify their source markets, with the University of Queensland’s acting vice-chancellor Aidan Byrne saying that this was “essential” to minimise the risks in attracting students from countries with their own improving universities.

Group of Eight executive director Vicki Thomson said that Australia’s success in attracting international students was laudable. “But it’s certainly not a sustainable way to fund Australia’s universities,” she added.

“What you’re seeing is a heavy reliance on external sources of revenue, such as international student fee income, at the same time as we have the government retreating from funding universities. You can’t ignore the coincidence.”

john.ross@timeshighereducation.com