Overseas students are getting harder to attract and unis will feel the squeeze

Prince Charles took his wife for a spin in the family Rolls Royce through London last month and entered a maelstrom.

Demonstrators protesting over funding cuts to universities surrounded the Prince’s ancient Rolls Royce and proceeded to decorate it with rotten eggs. The Prince and the Duchess escaped unscathed; higher education was not quite so lucky. And the turbulence created by that maelstrom will not be localized to the UK - it is only a matter of time before it has an impact in Australia.

What will be its effect here? To try to answer that question we have to examine emerging global trends and what they will mean for our universities.

While demonstrators terrorised the Prince out on the street, inside the Palace of Westminster, Parliament voted to increase the upper limit on the tuition fees charged by English universities. (Wales, Scotland and Northern Ireland have different systems).

As the demonstrators made clear, the fee increase was not popular with students. It was also unpopular with politicians. Thirty members of the governing coalition refused to support the increase, which passed with a tiny majority.

The new cap on university fees is £9,000 ($14,400). This is almost triple the current limit and 50% higher than the top fee charged to domestic students by Australian universities, which is around $9,000 for subjects such as law and medicine. (There are no official caps on the fees charged to foreign students).

Like Australia, no English student will be required to pay university fees up front. The UK government will lend students the money and collect it back through the taxation system.

The English fee increases coincide with steep decreases in taxpayer funding for higher education. The UK government has announced significant cuts to university teaching grants and a 40% or greater reduction is expected.

Subjects not considered vital to the economy (more or less everything apart from health, science and technology) will attract no government funding at all. This means that students who wish to study history, literature or philosophy will have to fund the entire cost of their education.

Shifting the responsibility for university funding from the taxpayer to graduates, and adding austerity measures on top, is becoming a global trend which will eventually have an impact in Australia.

Newly elected California governor Brown proposes cuts of more than $1 billion in the taxpayer subsidies paid to higher education institutions in California. This follows two successive years of budget cuts and academic salary reductions.

The latest cut takes state funding for higher education back to the level of 1999. To make up for the lost revenue, California has increased tuition fees, which are up by one-third. For the first time in the state’s history, student fees constitutes a larger part of university budgets than taxpayer funding.

Following California’s example, 43 of the 50 states have cut their higher education budgets, reduced academic salaries or increased tuition fees. Some have done all three.

Prestigious private universities, whose investment incomes have been battered by the recession have also tightened their belts, delaying salary rises, building projects and reducing scholarships.

Public funding of higher education is also being slashed in European countries.

The cuts began in Latvia with reductions of more than 50% and then moved to Italy, Greece, Scotland, Ireland, and seven other EU countries. Belgium, Hungary and Austria have scrapped their university expansion plans.

Australia remains an exception. But higher education is a global enterprise; events in one country inevitably affect others. While the Australian economy is relatively robust, that does not necessarily mean our higher education sector is immune to global change.

For example, austerity in higher education budgets in other countries means that Australian universities can expect greater competition for international students.

International students, who can be charged more than local students and whose numbers are not subject to government-imposed quotas, can be charged high fees to compensate for budget shortfalls.

Because of the perceived quality of their universities, the UK and the USA are already more popular destinations for international students than Australia.

As their universities market themselves more actively to students, especially in China, we may find that students who would have formerly chosen to study in Australia will prefer to study in the UK or USA instead. Canada, Ireland and New Zealand are also increasing their recruitment efforts. Even universities in non-English speaking countries are joining the competition, offering increasing numbers of their courses in English.

To help its universities, the American government has made student visas easier to get than Australian ones and their visa fees are lower than ours. The weak American dollar adds to the attractiveness of their universities.

Both UK and US universities are employing agents to find international students and they have already been successful. International student numbers are rising at UK and American universities while they are falling in Australia.

Australian universities earn a considerable amount of their revenue from international student fees. It is now almost certain that Australia’s revenue from such students will decrease over the next few years.

Competition for philanthropic contributions, grants, industry assistance is already intense, but we can expect it to become even hotter as universities whose budgets are hit scramble for resources. As in any competition, there will be a few winners and many losers.

Prince Charles did not know it but he had stumbled across a watershed moment in history; higher education may never be the same again.