5 reasons for doing online learning for school students well
13 April 2020
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What is really happening in international education?
9 October 2025
Over the last couple of years there has been a proliferation of policy initiatives designed to engineer a decline in international student numbers. These have included more stringent English language proficiency requirements, the introduction of a Genuine Student Test, increased visa application fees, risk ratings for institutions, measures to prevent ‘visa hopping’, lowered age eligibility for post study work rights, less generous post study work rights, and the introduction of international student ‘soft’ caps. It is a long list, and doubtlessly I have missed a few. My purpose here is not to debate the merit of each. My purpose is to question whether engineering a decline is a good thing.
An assertion common amongst those arguing that an engineered decline is not a good thing is that:
1. International education is good for the economy
A further assertion that is rolled out by those on both sides of the argument, depending on how they regard it, is that:
2. Universities rely on overseas student fees for revenue
And those in favour of an engineered decline have variously argued that:
3. There is not enough diversity in international education
4. Australia has let too many international students in
5. International students don’t go home
6. International students are a major cause of Australia’s housing crisis
What follows is a Fact Check for each.
1. International education is good for the economy
Evidence typically pointed to in support of this assertion – that international education is good for the economy - is export earnings. Pre-COVID international education was hailed as a $40 billion export earner. This ranked it fourth place, behind iron ore, coal and natural gas, and ahead of gold. Over the pandemic period, as borders were closed and international students were advised to go home, earnings plummeted to almost half - to $22 billion - causing international education to slip back a place in the export rankings. It has since made up the lost ground and some. The latest data has its earnings at over $51 billion. Higher education accounts for 71 percent of this figure. Vocational Education and Training (VET) for 21 percent.​
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Sources: Australian Bureau of Statistics (ABS) (2025) International Trade: Supplementary Information, April and Department of Education (DoE) Education export income
Over four fifths of the earnings from international education exports are attributable to the large three states – New South Wales, Victoria and Queensland. When ranked on a state-by-state basis, the earnings from education exports rank the sector in the top five for six out of Australia’s eight states and territories. And sees the sector claim first place in Victoria, South Australia and the Australian Capital Territory.​
Source: DoE, op cit
More broadly, international students spend money within Australia. When the boarders opened, their expenditures had an outsized effect on total consumer demand.
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​In aggregate, when all effects, both direct and indirect are taken into account, international students contribute in excess of $63 billion to the Australia economy and 335,000 jobs across all states and territories.​​
VERDICT: International education is good for the economy
2. Universities rely on overseas student fees for revenue
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A large proportion (40 percent) of the expenditures of international students just considered is on tuition fees. When fees are taken into account, the average weekly spend of these students lies well above that of Australian residents. When they are excluded, they spend roughly the same.​
Source: McCowage, Stinson and Fink, op cit
​If we consider the situation of just universities and what a difference this makes to the coffers, this chart suggests quite a lot. In 2023, the fees paid by international students made up a quarter of their combined total revenue. The pandemic appears to have disrupted a generally growing size and share of revenue. Time will tell of the effect of more recent policy shifts.​​
Source: DoE, Financial Reports of Higher Education Providers, for the years shown​
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It is important to bear in mind that that the above aggregates the finances of all universities in Australia. When we examine the most recently available disaggregated data a more nuanced story unfolds. Australia’s top five universities by revenue are the largest recipients of international student fees - Sydney University, Melbourne University, Monash University, the University of New South Wales, and Queensland University. At the very top end of the spectrum, international student fees account for more than two dollars out of every five dollars the revenue earned by Sydney University. Towards the other end, for the University of Notre Dame, they make up just 30 cents.​​
Source: DoE 2023 Higher Education Providers Finance Tables​
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VERDICT: Some universities rely on overseas student fees for revenue
While there will be mixed views on this verdict, mine is that it is not a bad thing. The revenue earned from international student fees is used to support teaching, which benefits both domestic and international students. It also augments funding for research. Less international student fees means less money for these purposes.
Obviously some universities are in a better position than others to do this, raising legitimate equity concerns. One of the ends the Government is attempting to achieve with its ‘soft’ caps is to redistribute international students across Australian higher education providers. The Ministerial Direction (MD 111) is to slow down processing once a provider reaches its cap. The intent is that international students then set their sights on other Australian providers. This is a policy lever that has never before been deployed making it difficult to predict whether this intent, however well-intended, will be realised. Particularly as some providers may not wish to increase their international student count. They may not have the capacity to accommodate extra international students. Which contrasts with the situation of others, like Western Sydney University, that have accommodation lying bare. Further, this policy assumes that international students are choosing Australia first and then their preferred institution. The alternative is that they are choosing between elite universities in Australia versus elite universities elsewhere. If the alternative is the reality then Australia risks losing high calibre prospective students who are spoilt for choice. An actual reality is that some universities have reached their caps fast and are taking on more international students, even with slower processing.
3. There is not enough diversity in international education
Last year, three countries – China, India, Nepal – were the source of 45 percent of international students. Asia was the source of four out of every five (81 percent of) international students.
Source: DoE International student monthly summary and data tables​
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If we look back at the situation two decades ago, students from Asia also accounted for four out of every five international students. So why all the fuss now?
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One reason is scale. International students now number around three times what they did back in 2005. Back then they accounted for a quarter of higher education enrolments. Today they comprise around a third. Therefore, if the flow of students from just one of the major source countries slows this can have a significant financial impact. That is, the concern is that lack of diversity makes Australia vulnerable to conditions in just a few countries.
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The hopeful news is that if we delve into the detail of the numbers it becomes apparent that there is evidence of change. The following chart captures the biggest movers pre and post COVID. The movements are explained by the imposition and removal of restrictions at our and source country borders, geopolitical tensions, trade agreements and other considerations. They have seen a huge drop off in students from China. And a gain of similar magnitude from India. They have also seen growing numbers of students from other countries, such as the Philippines and Colombia.
Source: DoE, op cit
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VERDICT: International education is dominated by a few source countries, but it is becoming more diverse
4. Australia has let too many international students in
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The charts below break down arrivals data by its contributing parts. The different shades of blue are international students. It is hard to escape that in recent years there has been a lot of blue. Over 2023-24, 207,000 or three out of every 10 arrivals were on Student visas. While down on the previous year's numbers and shares, they are well above what they were pre-pandemic. Prima facie there would appear to be grounds to the view that Australia has let too many international students in.​
Source: ABS (2024) Overseas Migration
​However, if instead of focusing on the last couple of years, we stand back, and reflect that there has been a little thing called a pandemic in the interlude, then there is a different way of looking at the data. Here I borrow an approach used by academics from the Australian National University (ANU) when considering similar assertions regarding Net Overseas Migration (or NOM). Those academics compared actual NOM against what would have occurred if pre-COVID trends continued. Then added up the losses over COVID and any catch-up since. The chart below does the same for international student arrivals. The shortfall is clearly much larger than the catch-up. That is, Australia has less international students than it would have had if pre-pandemic trends continued.​​
Source: Derived using the methodology in Gamlen, A (2024) “Explaining the 2024 Net Overseas Migration surge,” ANU Policy Brief using data from ABS Data Explorer
It is worthwhile pausing at this point to think about what has been going on. The post pandemic upsurge in international student numbers can be thought about as comprising Finishers, Deferrers and Workers. This is not an original categorisation. It is shamelessly borrowed from international education expert, Jonathan Chew as it is useful for framing our thinking. The Finishers were those who were stuck offshore and online when border restrictions were in place who subsequently arrived to complete their course on campus once those restrictions were lifted. The Deferrers were the many international students who chose to defer or delay their studies until Australia’s borders reopened. The Workers were those who took advantage of the lifting of the cap on the hours international students were permitted to work.
The Finishers are finishing. The Deferrers will work their way through the numbers. And, with the reimposition on the cap on the number of hours international students are permitted to work while studying, there is less of an incentive for the Workers to enter under the false guise of being a student. Which is why the numbers were always likely to come back down and revert to trend.
Worryingly, international student arrivals now lie well below the pre-COVID trendline. This calls into question the sense of the plethora of measures designed to engineer a decline in international student numbers. While some may use data like this to illustrate the success of those measures, I suggest that what went up, was always going to come down.
The real question now is what will bring numbers up again when the Government realises the error of its ways. IDP survey data of globally mobile students shows that they are looking less at traditional markets, such as Australia and Canada who are out-competing each other with draconian measures. Globally mobile students are exploring their opportunities elsewhere.
VERDICT: International student arrivals are less than what they would have reasonably been anticipated to be pre-COVID
5. International students don’t go home
There is no shying away from it, the possibility of migrating to Australia is important. It is one of the reasons that factor into the decisions of many for choosing to study here.​​​
Source: Quality Indicators of Learning and Teaching (QILT) Student Experience Survey 2023
One of the reasons. But not the only reason. And not even the most prevalent reason. Other considerations, such as safety, cost of living and the reputation of Australia’s education system, are more prevalent.
So do international students stay on? Or do they go home?
Locating precise numbers on who stays and who goes turns out to be a little illusive and not constant over time.
The most up-to-date data I can locate on the movements of former international students immediately post-graduation is from a recently released report by Jobs and Skills Australia (JSA): in 2022-23, 53 percent of graduates were granted a further visa after their Student visa.
However, as is apparent from the chart below, 2022-23 was an abnormally huge year, due to the realisation of pent-up demand following the reopening of borders. A year later, the number of visas granted to former holders of Student visas had returned to pre-COVD levels. As such, I do not feel on safe grounds using the 2022-23 data as a basis for generalisation. But, unhelpfully, nor do I have a better substitute.
Source: : Department of Home Affairs, Student visa and Temporary Graduate visa program report, at June 2024
​What I can tell you about is how graduates extend their stay, at least initially. In 2023-24, 30 percent of the former holders of Student visas were granted Temporary Graduate visas, another 15 percent were granted new Student visas, and 44 percent were granted other temporary visas. Only tiny numbers (six percent) progressed straight to residency.
Residency takes time. And, more often than not, another visa or two. Officials statistics for former Student visa holders who do migrate permanently is that more than half - 56 percent - worked their way through three or more temporary visas first. The average time taken is three to five years.
The point is that it is not easy to migrate permanently. Nor is it cheap. Which is one of the reasons why many do eventually go home or to a third country. Many may never have held aspirations of staying permanently. The JSA report finds that in more recent years that has been the case for most international students from China. Some may have just wanted to stay on long enough to earn money to help defray the costs of their studies and to gain valuable work experience.
So what proportion do eventually stay permanently? The latest and best guesstimate can also be found in the JSA report. While data is not readily available, JSA estimates that around 35 to 40 percent of all international students who commenced in the early 2010s achieved permanent residency within 10 years. For students who commenced their studies in the late 2010s, the proportion is estimated to have declined to around 25 to 30 percent. The proportion is anticipated to fall further as the permanent migration intake cannot absorb the growing number of graduates.
The 25 to 30 percent share is almost double the previous estimate of 16 percent relied upon by commentators. You can count me amongst them. It is fuelling the anguish of some and claims that too many international students are staying. Nonetheless, it does not change the fact that most still eventually leave.
VERDICT: Most international graduates eventually leave
6. International students are a major cause of Australia’s housing crisis
I have left perhaps the most controversial assertion to last: international students are a major cause of Australia’s housing crisis. I am not going to pussy-foot around on this one. They are not. At most they are a minor influence.
The reality is that, Australia-wide, international students account for only six percent of the rental market. More, but not a whole lot more, in Victoria. And much less in other states and territories, like Tasmania and the Northern Territory.
Source: Mandala (2024), op cit
​This small share might beggar belief given international student numbers. A big reason why is because 39 percent of international students are in accommodation outside of the general rental market. That is, in university accommodation or private sector purpose-built housing.​​
Source: Mandala (2024), op cit
A real risk is that an engineered reduction in international students will cause less and not more development of university accommodation and private sector purpose-built housing. That is, plans may be put on ice if there is fear that accommodation will lie vacant. The perversity is that this could mean that more international students spill out into the general rental market and could create grounds for currently misinformed assertions.
When Australia’s top economists were asked for their views on what to do about the housing crisis, very few – six percent - thought that restraining migration would have much of an impact. There was some support for the opposite – that is, the increased migration of construction workers. Many favoured remedies that address the supply-side barriers, such as planning restrictions and stamp duties. Which is suggestive of the bigger causal factors.
Source: Economic Society of Australia, Housing Reform, National Economic Poll 65
VERDICT: Other factors are a bigger cause of the housing crisis than international students
Four reform directions
So, there you have it. Six assertions. One validated by the facts. Two partially validated. And three refuted. None of the verdicts provide grounds for an engineered reduction in international students.
This is not the same as saying there should be no response to the current realities. To the contrary, I propose four reform directions.
The first relates to the need for tertiary education providers to diversify their revenue streams. But diversity should be achieved through growing other sources of revenue, such as by meeting the needs of more domestic students and through the commercialisation of research. Rather than squashing international student fees.
Similarly, encouraging greater diversity in source markets for international students makes a lot of sense. But only if that diversity is brought about by growing the student intake from alternative source countries. This is my second proposed reform direction. Geographic diversity should not be brought about by purposely shrinking the intakes from major markets.
Third, rather than engineering ways to encourage more international graduates to leave, a better policy focus would be to contrive ways to entice more, who are either high quality and/or who possess skills that are in short supply, to stay. And, I hasten to add, to address the barriers that prevent them from putting their skills to best use. International graduates of Australian programs of study arguably make great migrants, as they have studied here, lived here and have likely worked here.
There are no prizes for guessing my fourth reform direction. That is to spend less energy on the blame game and more on addressing barriers to housing affordability and supply.
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Mary Clarke
Principal
DXP Consulting
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M: +61 401 088 571