How universities milk the international student ‘cash cow’

Last month’s Four Corners report on Australia’s $35 billion international student trade described the industry as a “cash cow” that is being milked by Australia’s universities for easy profit:

“In terms of attracting international students, universities will do whatever they need to do…they are the cash cows. There is no doubt about it.” Academic

Last week, I presented research from Jerry Zheng, the content editor for OneClass, which used official data to estimate that international enrollments could surpass domestic enrollments at the University of Melbourne by 2020.

That is, in 2014 international students represented 31% of the University of Melbourne’s student population. But in only four years, that percentage rose to 46% after international student enrollments soared by 83%. By contrast, domestic enrollments have fallen in consecutive years (2017 to 2018). Therefore, if current trends persist, international students could outnumber domestic students at the University of Melbourne by 2020.

As I noted last week, similar forces are at play at other Group of Eight universities:

In 2017, the University of Sydney, Monash, ANU and the University of NSW all had higher international student shares than the University of Melbourne after they also experienced explosive growth. Presumably then, it also won’t be long until they too are dominated by international students, assuming current trends persist.

Jerry Zheng’s research also shows the alarming extent to which the University of Melbourne has pushed up tuition fees for international students alongside student numbers.

In a nutshell, international tuition (17.88%) increased 3.5 times faster than the inflation rate (5.17%), and 2.6 times faster than domestic tuition (6.76%) between 2015 and 2019. And if we use the University of Melbourne’s bachelor of commerce tuition as a case study, tuition fees for international students increased by $6,456, whereas domestic students only saw a $692 tuition increase between 2015 and 2019:

In 2018, 4178 new international students enrolled in 2018. That makes last year the largest intake of international students ever by the University of Melbourne.

As more foreign students come to study at the University of Melbourne every year, their tuition continues to increase along with it.

On average, international tuition fees have increased by 4.5 per cent every year from 2015 to 2019.

For students in the Bachelor of Commerce program, international tuition fees were $33,760 (lower bounds) in 2015. To study in the Bachelor of Commerce program in 2019, it costs international students $40,216 – a 19.12 per cent increase in four years.

The bachelor of commerce program is the primary field of study for international students at the University of Melbourne. In 2017, more than one-third of foreign students chose this program.

Hypothetically, if 38.2 per cent of the total international students (19,988) enrolled at the University of Melbourne’s bachelor of commerce program in 2017, the university would have nearly gained $281 million from international tuition fees alone…

The university would need 29,633 domestic students enrolling in the bachelor of commerce program to match the revenue gained from international students – nearly 10,000 students more

For commonwealth supported students, the domestic tuition fee has increased year-over-year at a considerably slower rate.

On average, domestic tuition fees have increased by 1.6 per cent every year from 2015 to 2019.

Looking only at the tuition fees for the bachelor of commerce from 2015 to 2019, domestic students saw an increase of $692 to their tuition, while international students saw a whopping $6,456 increase between those four years – a difference of 9.3 times.

Student contribution amounts are capped by the government, unlike international tuition fees.

This means that international tuition fees will continue to soar unabated for as long as international students will keep flocking to the University of Melbourne.

Let’s look at how both domestic tuition fees and international tuition fees at the University of Melbourne stacked up against the Australia’s annual inflation rate.

Using the current inflation rate for 2019 and, again, the bachelor of commerce tuition fees as a reference point, we can see domestic tuition increases has hovered slightly above the annual inflation rates on average.

Using the current inflation rate for 2019 and, again, the bachelor of commerce tuition fees as a reference point, we can see domestic tuition increases has hovered slightly above the annual inflation rates on average.

International tuition, however, has ballooned to 3.5 times that of the inflation rate from 2016 to 2019.

Tuition price increases for international students weren’t designed to keep up to pace with inflation, they were designed to accelerate the rate at which universities like the University of Melbourne could generate revenue.

Especially since the revenue generated from domestic students are only a fraction of what an international student can bring in.

In addition, it’s both prosperous for the school as well as the Australian economy given the purchasing power of the international students coming in.

Conclusion

With the current trends, the University of Melbourne, along with other Australian post-secondary institutions, will continue to enroll more and charge more to international students in the near future…

The combination of international enrollment increases and international tuition fee increases will only amplify the revenue generated from the international students in the coming years, and institutions like the University of Melbourne will continue to harvest from them.

No wonder Australia’s university sector is so opposed to reforms, such as tougher English language standards. They are making out like bandits from the international student boom, while the negative externalities on education standards, overcrowding in Australia’s major cities, and wages (given international students are key victims of exploitation and wage theft) are ignored.

Given the myriad of issues that have come to light from the Four Corners report (and elsewhere), Australia desperately needs a holistic assessment of the international student trade from a respected independent organisation like the Productivity Commission (PC). We need the PC to undertake a public inquiry and cost-benefit analysis to ascertain whether the international student industry is maximising the welfare of Australians, and to provide recommendations on how the system could be improved.

[email protected]