Looking elsewhere: The impact of international student caps on demand for Australian higher education
By Zac Ashkanasy, Edwin van Rest
When the Australian International Education Conference takes place in Melbourne this week, there is likely to be one item on the agenda that takes up more airtime than any other. Indeed, international student caps has been all anyone in the higher education sector has been able to talk about for a while.
In August, when the Commonwealth Government announced it would be limiting the number of international commencements in 2025 to 270,000, Education Minister Jason Clare said the measures were about “setting up the system in a better and fairer way so it’s not only a lucky few universities that benefit but the whole sector”.
There was predictable and immediate backlash from universities, with many pointing out that international enrolments are crucial to their institutions’ business models. Universities Australia chair David Lloyd told the ABC that the cap would “apply a handbrake” on what is one of Australia’s largest export industries, additionally noting that international student fees allow many universities to support research, teaching, and campus infrastructure in the face of government funding shortfalls.
Less discussed at the time was what we might call the optics of the announcement. Described by some as immigration policy dressed up as its educational equivalent, and in any case introducing artificial scarcity into a market that, except during the pandemic years, had grown accustomed to steady to growth, the caps always had the potential to have a chilling effect on student demand abroad.
Unfortunately, recent data appears to bear out the most pessimistic predictions. There is a 0.8 correlation between online pageviews on Studyportals websites with actual international enrolments 15 months later. In Australia, such pageviews have fallen off a cliff since the announcement of the caps. Indeed, they appear to have been more damaging than COVID-19 ever was.
Prospective student interest to study in Australia
The notion expressed by some Vice-Chancellors in the press – that caps would force a redistribution of students away from the cities into outer metropolitan and regional areas – is unlikely to be borne out, either. Recent Studyportals data found that 57 percent of prospective students who are currently considering GO8 universities would look abroad in the event that they are unable to enrol in those schools. Only 16.5 percent are considering other Australian metropolitan universities, while a mere 8.3 per cent are considering alternatives in regional areas. It is the reputation of our institutions, not the prospect of coming to Australia in general, that is most attractive to prospective students.
It is hard not to feel that a lot of this was predictable. While Studyportals is underrepresented in China, the Chinese story remains relevant and telling. After largely fuelling the boom in international enrolments over the past 15 to 20 years, Chinese demand has increasingly plateaued as prospective students focus their attention on the highest-ranking universities worldwide, and as their own domestic institutions have risen considerably in quality. The notion that such students would be interested in coming to Australia to attend non-GO8 universities was never particularly realistic. The perception of the caps as anti-immigration is unlikely to have helped much, either.
But these figures were predictable for another reason, too: we’ve seen all this before, and recently. As my Canadian colleague Matt Durnin pointed out at the Financial Review Higher Education Summit in August, the Canadian government’s student caps, which were introduced earlier this year, have seen enrolments plummet as students look elsewhere. He said that most of the Canadian universities he works with are likely to fall 30 per cent short of their caps because of the damage that’s been done to the market and to the reputation of Canadian higher education.
This is, and should be, deeply troubling to anyone who cares about Australian universities. Revenues are going to be hit hard even if they are able to fulfill their caps. Falling short of them, as in the Canadian example, would be deeply damaging. Staff cuts, the discontinuation of courses, and downsizing, are all distinct possibilities.
Universities looking to avoid such eventualities now face the challenge of optimising the spread of students within the caps they’ve been given. For selector institutions, this will require doubling down on brand promotion, a greater emphasis on enrolments from high-converting segments into high-margin programs, and, potentially, price hikes and a reduction in scholarships and other discounts. For recruiter institutions, it will require targeted marketing at the city level, with an emphasis on parents and other influencers, as well as a tightly managed agent strategy, optimised approaches to scholarships and discounts, and much more rapid application processing. Regional universities seeking to make good on the supposed promise of the caps would do well to study their real competition.
All of this, too, will take precious time and resources. It is not perhaps the kind of thing on which universities would like to be focusing their efforts, nor indeed the methods they would like to be putting into practice the better to stay afloat. But the caps, however misguided as policy, appear for the moment to be here to stay, and the alternative to drastic measures – losing the income stream that bankrolls research and teaching, the very things upon which Australia’s education export industry has been built – is frankly not an option.