The fact that Australian Universities are facing long-lasting financial and academic stresses has been highlighted in an earlier article .

Universities Australia has now estimated a revenue shortfall across the sector of between $3 – 4.5 billion for 2020. The larger Group of Eight universities are severally estimating revenue losses of between $200 – $600 million. Beyond 2020, how long will this COVID-19 crisis last and what will be the financial costs to Australian universities? These are two key questions that must currently be focusing the minds of government education planners and university leaders.

With the Minister for Education recently guaranteeing grant funding for 2020 for Australian subsidised students, irrespective of the capacity of universities to meet targets, the financial impact of COVID-19 for Australian universities will revolve around the loss of international fee revenue.

A more accurate reading of the numbers of international students enrolled in Australian universities will become available once data generated from the Semester One census date (delayed until the end of April) becomes available. However, based on estimates of revenue losses forecast by individual universities and Universities Australia, it is likely that international student enrolments will fall short of target by between 30 per cent to 50 per cent by the end of 2020.

Semester Two international enrolments for Australian-based programs are likely to be appreciably lower than for Semester One as some students will complete their courses and, with Australian borders likely to remain closed to foreigners, there will be little or no new international student onshore enrolments.

While ministers continue to talk up the “bounce back” on the other side of the virus, Australian universities are likely to remain impacted for a number of years. In fact, border security restrictions and an increasing hesitancy to travel abroad are likely to result in further declines in international enrolments in Semester One 2021. Even assuming some return to “normality” (a big ask given the scale and nature of the impact), the rebuilding of international student numbers will take years, if in fact it ever so occurs.

In 2018, the latest year for which sector wide financial data are available, Australian universities generated $8.8 billion in international student fee income.  This amounted to 26 per cent of total revenue. Assuming conservatively a 35 per cent reduction in international fee revenue in 2020, a 50 per cent reduction in 2021, and an eventual return to “normality” by 2024, based on the 2018 data, the total revenue losses that would occur amount to between $11-12 billion. After allowing for subsequent growth in international enrolments and indexation of fees, the total revenue losses increase to $13-15 billion. This makes no provision for a probable reduction in later year course fee levels as Australian universities seek to rebuild market share in a more competitive environment in which an exclusively campus-based student experience may be challenged by on-line modalities.

Given that for many universities – and the larger universities in particular – the fees charged to international students represents at least ‘full price” while the actual cost for each additional places is marginal, international fees have helped support much of Australia’s university research effort as discussed earlier and allowed for an unprecedented capital works programme across the sector.

Without significant and painful adjustments elsewhere these are the programmes that are most at risk within the higher education sector as a result of the fallout from COVID-19.

Ian Marshman is a former Senior Vice Principal and Frank Larkins a former DVC at The University of Melbourne.


to get daily updates on what's happening in the world of Australian Higher Education