International education outlook stormy

Australian international education is encountering what has been described as "a perfect storm". This is the result of a host of negative factors for Australian education all operating at the same time.

First, of course, is the global financial crisis, which has weakened demand because parents and students have found themselves under financial stress.

The weakening American dollar - and strengthening Aussie dollar - has made Australia more expensive while, at the same time, America has become a less expensive destination for foreign students.

As the USA remains the number one choice for foreign students, particularly those from China, students who would have formerly come to Australia are now choosing to study in the USA. Because of the financial crisis, American universities have become more interested in attracting fee-paying international students.

Indeed, they are now using IDP, the marketing agency originally founded by Australian universities, to compete with Australia. They are also employing other agents; in many cases, the same agents used by Australian universities.

The fees at many American state universities are lower than ours. The US government is helping universities by relaxing visa requirements and greatly speeding up visa processing times. The UK, the second most popular study destination after the USA, has also freed up its visa system and it also makes visa decisions faster than we do in Australia.

Australia is also suffering from the terrible publicity surrounding attacks on Indian students, the collapse of private providers (which sometimes leaves students stranded and out of pocket) and the just completed review of the ESOS Act, which gives the impression that Australian education has been poorly regulated. Not surprisingly, many agents have lost confidence in Australian education, preferring to send students to the USA and UK instead.

Alas, this is not the end of our problems. The Australian government surprised and worried international students by cancelling the old list of occupations acceptable for immigration and then, after several months of uncertainty, replacing the list with a new and much smaller one. Students are now worried that the rules may change again.

While our competitors are relaxing their visa requirements, the Australian government has tightened ours requiring Chinese students (who make up one-third of higher education enrolments) to show that they have $18,000 in the bank for every year of proposed study.

In other words, students must have $54,000 in cash for a three-year degree, plus fees, or around $100,000 up-front. Also, unlike our competitors, the time it takes to issue an Australian visa is increasing.

To complicate matters further, national marketing of education has been transferred from Australian Education International to Austrade reinforcing, perhaps unfairly, the notion that Australia sees international students as similar to a commodity such as iron or coal.

The result of all these coinciding factors is a dramatic downturn in student visa applications (up to 40 per cent in some markets). Much of this reduction is in sectors other than higher education. English language schools and further education colleges, for example, have seen a massive fall-off in applications. Nevertheless, higher education enrolments are also being affected.

Although it is too early to forecast the effect on Macquarie, we can already see a reduction in applications from this time last year. Still, I think that we may be in a better position than most universities, at least in the short term. We have a strong "pipeline" of students who are already on campus studying at SIBT.

My guess is that our 2011 fee revenue will be similar to this year’s but I also feel that we are seeing a secular trend, which will see Australia’s market share of international students decrease over the next decade.