Risks to Australian Universities from China Student Boom

Salvatore Babones (2019) has produced a detailed 44 page analysis of the risks to Australian universities from over-reliance on funding from Chinese students. The language used is alarmist: "... multi-billion dollar gamble with taxpayer money to pursue a high-risk, high-reward international growth strategy ...". Australian universities have a high proportion of international students from one source, however I suggest this does not necessarily translate into a financial risk.

The report focuses on seven universities: Melbourne, ANU*, Sydney, UNSW, UTS, Adelaide and UQ. Babones points out that China is the largest source of inbound international students, making up more than half. These make up 13%  to 22-23% of student fees for the universities.

Australian universities have a high proportion of international students from one source. However, a point the report does not emphasize is that much of the cost of teaching students is variable: as the revenue from students drops, so does the cost of teaching them. This reduces the financial risk to the university.

While Australian universities have a high proportion of international students in comparison with other countries, they still only make up 25% of the student population (with half from China). So if students from China were to cease, this would only reduce overall student numbers by 12.5%. That would be a serious concern for some areas of universities, particularly business studies, but not a risk to  institutions overall. There would be some excess teaching space, however, these are currently undergoing reconfiguration and replacement, as lectures are replaced with flexible learning.

I suggest a larger concern for universities should be the changes taking place in the way education is provided, and what forms of qualifications will be demanded by the workplace. Universities have argued that there is a synergy between their education and research roles. This was always a questionable link, as researchers do not necessarily make good teachers. Also the shift to online education places at risk university's business model. The demand for smaller, even micro, credentials, also presents a challenge for universities.

Universities, and university educators, are not just sitting back waiting for disaster. They are actively changing the way Australian university education is provided. As someone who designs courses for, and teaches, international students.

Reference

Babones, Salvatore. The China Student Boom and the Risks It Poses to Australian Universities, Analysis Paper 5, , Sydney, Centre for Independent Studies, August 2019