A lesson from the British international student ‘debate’

Last week I wrote about higher education and student fees. However university funding is a multidimensional beast. I feel it would be remiss not to touch on another major revenue stream for Australian universities: international students.

Here is some perspective.  In the United Kingdom, there were a total of 425,265 international students (EU and non-EU) in higher education in 2012-13. In the United States, the total was 819,644 for the same period.

In the U.S. this is equivalent to 4 per cent of all enrolments while in the U.K. about ~25 per cent.

In Australia, in September 2013, there were 346,965 international students currently in the country (June and December skew on the stock stats because people travel in holidays). This is equivalent to about 32 per cent of all enrolments (however, one should note ‘higher education’ is a broad term). Higher education in Australia is particularly of interest to Asian international students. About 90,000 Chinese students are in Australia compared to a tick over 200,000 in the U.S. Given the vast size difference between the two higher education sectors, this is rather incredible. Perhaps I’ve been drinking the kool-aid, but I see this as a major positive for Australia in the coming decades.

Moving onto income. The money generated from international students is substantial. In 2012-13, this was the 4th largest ‘export’ worth $14.4bn.

When you flesh this out a bit, there are several consequences.

While about 30 per cent of my undergraduate university education was financed by a loan I’ll pay back, the other 70 per cent was kicked in by government. The total cost to me was about $14,000. Yet, for an international student to take exactly the same degree, the costs were about (this is from memory) $55,000 (the same course now costs approximately $78,000). This is despite, presumably, costing exactly the same to teach myself and a randomly selected international student. This fee difference shrinks when discussing post-graduate education but there is still some gap.

This is effectively the subsidisation of higher education for Australians by international students. I don’t see this as a negative outcome, just something to be noted in any discussion about the structure of higher education funding in Australia.

But with this subsidisation comes important considerations. For instance, in the U.K. this year, for the first time in 29 years, there was a drop in the number of international students. In Australia, we’ve experienced out own downturn in students from the highs of 2007-09 and the panic induced to the entire higher education system because this downturn was a cost.

This comes back to a key foundation of migration. Its hardly static. The flow of people, students in this case, responds to many things; the quality of institutions, the quality of other institutions, fees, migration policy and the exchange rate as well other, less tangible effects such as culture and the reception of international students in communities where they study. This last impact was felt heavily after several cases of violence against Indian students in 2009 in Melbourne. It is impossible to untangle the precise impact this had, but I believe it was widely felt, with enrolments dropping off given the broad exposure the incidents received in Indian media.

This dynamic nature of migration should not be forgotten by higher education policy makers and those who care for university budgets. The counter-factual of a substantial reduction in the number of international students in Australia is a massive hit on the higher education budget and likely a large increase in the fees for domestic students.

Britain is currently showing Australian policy makers in this field exactly what a fiasco this can turn into via the Cameron government’s crusade against immigration and the attrition of international students in the process. Before any big decisions are made about higher education in Australia, various environments for international students should be seriously considered as we know change can happen quickly.

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