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Australia: Updated modelling projects four-year loss of AUS$16 billion for universities

Short on time? Here are the highlights:

  • Updated estimates from Universities Australia project revenue shortfalls for Australian higher education could reach up to AUS$5 billion this year
  • This represents a significant proportion of direct spending by foreign students on Australian university fees, which accounted for 26% of all higher education revenues in the country as of 2018

Updated forecasts from Universities Australia project a financial impact of up to AUS$16 billion for the nation’s universities through 2023 (US$11.2 billion).

The estimate is based on new four-year models from the peak body that examine the downstream effects of COVID-19-related enrolment shortfalls this year.

Loss projections for 2020 have also been updated and Universities Australia now anticipates lost revenue of between AUS$3.1 billion and AUS$4.8 billion for the current year. This compares to earlier forecasts that estimated the 2020 shortfall at between AUS$3 billion and AUS$4.6 billion.

Universities Australia Chief Executive Catriona Jackson said the new four-year modelling underlines the sustained effect of COVID-19 on university finances, not just in 2020 but in the following years as well.

Speaking to SBS News, Ms Jackson outlined the thinking behind the updated impact models. The immediate issue, she explains, is that current restrictions on international travel will prevent students from beginning their studies in July, which is when the second semester of the Australian academic year gets underway.

“Almost half of international students start in the second semester, so they haven’t started yet, and it’s now clear they won’t be able to get into the country, so that’s a whole cohort of students who won’t start,” she said.

“So, a first-year who doesn’t start this year is a second-year who won’t be here next year and a third-year who won’t be here the year after. This is not a one-year problem for universities. It’s a two, three, or even four-year problem.”

Australian Bureau of Statistics data puts the total economic impact of international education at AUS$37.6 billion as of 2018/19 (a period doing which total education export revenues increased by AUS$5 billion over the year before). Roughly AUS$27 billion of that value is in the form of direct spending on tuition and other student fees.

Related data from the Australian Department of Education and Training notes that higher education institutions accounted for 46% of all foreign enrolments in Australia in 2019 (with an international student base of nearly 760,000 that year).

And another recent study from the Australian Population Research Institute points out that, “Overall, total Australian university overseas student fee revenue more than doubled from 2012 to 2018, increasing from AUS$4.1 billion in 2012 to AUS$8.9 billion in 2018. By 2018, this revenue amounted to 26% of total university revenues.”

This puts the prospect of a shortfall of up to AUS$4.8 billion (this year alone) in rather stark relief. Those recent-year data points highlight that the upper end of the Universities Australia projection for 2020 represents a significant share of total foreign student spending at Australia’s higher education institutions.

“We can’t pretend that won’t have a big impact,” said Ms Jackson. “Not only does that revenue support the staff and facilities to educate the next generation of skilled workers, it also pays for much of the research and innovation that keeps Australia internationally competitive.”

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