Master’s pivot ‘problematic’ for cash-strapped universities

Australian universities are pinning their hopes on a turnaround in domestic demand for taught master’s courses, to offset their financial losses from the political crackdown on international education.

The strategy risks backfiring, however, by squandering a safety net for institutions with dwindling undergraduate enrolments.

Analyst Keri Ramirez said “growth constrained” universities – those whose international student numbers were already near the indicative caps set by the federal government last year – were renewing their interest in full-fee domestic postgraduate courses as they adapted their business models to the crackdown.

Ramirez said university websites revealed an increase in online delivery of postgraduate courses. Meanwhile, around a dozen institutions had sought his Studymove consultancy’s advice on the competitiveness of their domestic master’s fees.

Student contributions for unsubsidised domestic postgraduate courses are unregulated in Australia. Ramirez said that while the best-ranked universities typically charged the highest fees from overseas master’s students, that pattern did not apply domestically.

Now, administrators want to know how their domestic fees compared with those of their competitors, as they seek to increase their postgraduate intakes – a challenging prospect in a “flat” master’s market, but one of the few available options to boost revenue.

Master’s enrolments have boomed in Australia over the past decade, but only because of international demand. Domestic enrolments in taught postgraduate courses rose 20 per cent between 2014 and 2023, mainly because of a spike during the pandemic. Over the same period, the overseas enrolments more than doubled.

Ramirez said domestic demand for master’s courses was unlikely to increase markedly while unemployment remained low in Australia, although universities might try to encourage interest by contracting their teaching to businesses.

Andrew Norton, professor of higher education policy at Monash University, said institutions with insufficient undergraduate demand were transferring their unused commonwealth-supported place (CSP) subsidies to master’s courses. This was good news for would-be postgraduate students but risked undermining universities’ earnings by denying them potential full-fee revenue.

Institutions currently receive their full quotas of CSP income whether they fill places or not, under a scheme called the Higher Education Continuity Guarantee. Originally a three-year initiative to help universities adapt to the 2021 Job-ready Graduates reforms, it was extended until the end of 2025 as part of the Australian Universities Accord reforms.

Norton said some admissions staff felt “obliged” to use up their CSP allocations, even though it was not necessarily in their universities’ financial interests. The institutional quota was treated as a “target” even though it was “framed as a maximum grant amount”, and failing to meet the target engendered a “sense of failure”.

Staff also felt pressed to maximise the use of their CSPs to position themselves for the proposed “managed growth system”, which is due to come online from 2026. Norton said universities’ expended CSPs were likely to be interpreted as “base level” enrolments under the new system.

“That implies that you should use all your places, or even more potentially, to get a better starting point in the new system,” he said.

john.ross@timeshighereducation.com