Dec 18 2020
Over the past five years, Australian higher education providers have become increasingly reliant on international student enrolments. In July 2016, the Federal Government introduced the Simplified Student Visa Framework (SSVF), which replaced the Streamlined Visa Processing (SVP) model. Under the SVP system, international students were treated as a low immigration risk regardless of what country they were from, their proficiency in English and their financial status. The SSVF has:
- Reduced the number of student visa subclasses from eight to two
- Introduced a new single immigration risk framework for international students
The relaxation of visa requirements, as well as the weak Australian dollar, has resulted in international enrolments skyrocketing over the period. The increase in demand from international students has been a financial boon to operators in the University and Other Higher Education industry, as well as those in the Technical and Further Education and Training industry. International students are typically charged higher course fees than domestic students and are generally required to pay tuition fees in full prior to enrolment or at the beginning of each semester. The ABS estimates that Australia’s higher education sector generated a record $15.9 billion in international student tuition fees in 2018-19.
However, the COVID-19 outbreak in early 2020 has significantly reduced the number of international students in Australia, and put higher education providers under immense financial strain. In an effort to curb the spread of the virus, the Federal Government closed Australia’s international borders. The first travel restrictions were announced in early February 2020, focused on travellers from China and were enacted before the academic year had begun. Universities Australia has estimated that over 100,000 Chinese international students were unable to return to Australia due to the travel restrictions. The closure of Australia’s borders in late March 2020 further exacerbated the situation, with international students around the globe unable to return to Australia. Additionally, the slowdown of the Australian economy as a result of the virus outbreak has meant many international students who were in Australia have lost their employment, and forced to return to home. Revenue for the University and Other Higher Education industry is expected to contract by 6.9% in the current year, with profit margins expected to fall significantly as well.
International student enrolments are likely to enjoy a strong recovery over the next five years, once Australia’s borders reopen to non-residents. China represents the largest source of international students studying in Australia, accounting for approximately 29.6% of total enrolment numbers. Other countries with high international student numbers in Australia include India, Nepal, Brazil and Malaysia.
The ongoing diplomatic dispute between the Australian and Chinese Governments is expected to have a negative impact on the recovery of student enrolments from China. Additionally, the deterioration in global economic conditions is expected to make tuition fees unaffordable for potential students in other significant markets. Australian higher education providers are also anticipated to face increased competition from providers in other countries over the next five years. Relatively relaxed visa requirements have encouraged strong growth in international enrolments in Australia over the past five years. The anticipated appreciation of the Australian dollar over the next five years will likely make tuition fees relatively more expensive. Furthermore, countries such as the United Kingdom and Canada will likely intensify their marketing campaigns to attract international students over the period, increasing external competition. Consequently, the number of international enrolments is projected to rise at a much slower rate over the next five years, compared with the previous five-year period. The lack of international students is expected to limit the recovery of the University and Other Higher Education industry.
IBISWorld Company and Industry reports mentioned in this release: