The Competitive Outlook for Higher Education in Australia
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Uncertainty around COVID-related travel restrictions and a chill in Australia/China relations have dramatically reduced foreign enrollment in Australian colleges and universities, having a significant effect not only on the institutions themselves but also on the Australian economy generally.
The number of foreign students applying for Australian student visas, while still very healthy, has fallen to about 153,000 from a peak of about 178,000. The Mitchell Institute estimates the number of international students coming to Australia has declined by 50%, translating into an absence of about $11.4 billion a year in spending. The universities themselves will lose an estimated $2 billion this year, in part because for some courses a foreign student may pay five or six times as much to attend an Australian university as a domestic student.
But the competitive environment that Australian universities will face in the post-pandemic environment is going to be different from the one that was propelling the schools forward at the start of 2020. Universities now clearly understand that they are going to have to change their current funding models as well as recalibrate their product offerings.
Here are some changes we’re likely to see:
More remote options. Several accredited private universities in Australia have started to offer online courses to students outside the country that lead to standard degrees. While the number of students enrolled is currently small — about 5,600 — it is likely to become a groundswell.
A focus on value. Students around the world will increasingly be looking for value for money. For international students, that may mean an adjustment in the massive differences in what they pay vis-à-vis domestic students. For Australian students, going to university and graduating with no tangible vocational outcome is no longer acceptable.
For example, one university in Victoria experienced a 52% dropout rate among psychology majors because there were so many of them and only 10% would qualify for the honors years, which enabled them to become psychologists. What universities haven’t been doing across the board is talking to students about what they could do with their degree and what job they could get at the end of it. What’s more, employers have been quite vocal about saying that many university graduates are not work ready.
New markets. With such a focus on China, we tend to pay less attention to other parts of the world. For example, only 9,000 African students are currently studying in Australia. They come predominantly from Nigeria, which has a burgeoning middle class, but there are other African countries where the middle class is growing, and we’re starting to see greater interest from them. These students present unique opportunities because they have quite different learning needs than Asian students, which means universities will have to reposition how these students are taught, where they are taught, and what they are taught.
New revenue models. Subscription models are on the rise, and they are fascinating. A few private universities in India are offering students a monthly subscription, much like Netflix, which offers access to coursework leading to undergraduate and graduate degrees. If a school can get 500,000 students to pay $30 or $50 a month, its ability to scale is phenomenal. The challenge with that model, even though the potential is enormous, is that in online learning, there is not much teaching or tutorial support. That can result in retention rates below 10%, which is a poor educational outcome for students and for the brand. But that model is evolving, and with just-in-time tutoring and synchronous classrooms, retention rates rise to between 40% and 50%. With the full online experience, retention rates are between about 75% and 85%. So, a subscription model could work so long as it meets the needs of students and enables institutions to retain them and deliver a quality outcome.
One final point. If we consider why Australian higher education traditionally has been such a strong contender in international markets, a very important factor — aside from the quality of the education itself — was the fact that Australia is a very safe country. On top of that, its educational product has been reasonably priced in comparison with other Tier One countries. There is also the potential to become a citizen. There are recent predictions that the Australian international student market will struggle to return to its pre-COVID enrollment numbers. If it does, it will likely take time to regain that status. This “return” may look very different from the traditional models that were provided up until 2019. Australian universities are working to evolve their delivery models at speed and, by focusing on domestic students, are honing their offering and retention strategies.
Australian institutions will likely continue to attract a significant number of Chinese students (though at lesser volumes). The trend prior to COVID was reduced numbers of Chinese students predominantly due to their maturing university sector, increased competition closer to China, and strained unilateral relations. Australia will probably see continued growth in the number of Indian and South Korean students, as well as others from Southeast Asia, despite competition from Singapore, Malaysia, and Vietnam. There are also opportunities to attract students from Africa and the Middle East. Those are hopeful signs.
About Pauline Farrell
Pauline Farrell is the managing director of Skills 4 the Future. She also manages projects for KeyPath, Department of Education, iVet, and a range of other organizations. Pauline has 25 years of experience leading innovations that transform the student and teacher experience while keeping a close eye on ROI. Her most recent senior executive roles have been for a regional TAFE, Navitas, Pearson, Swinburne University, and Box Hill Institute. She has worked as a teacher, academic, executive, and consultant and presented at over 100 conferences. Pauline is the author of eBusiness Now, winner of UMTC Melbourne University PhD scholarship, DEET T.R.I.P. fellowship, and multiple awards in innovation, e-learning, and leadership. Her current major research interests focus on the future of work and how education can evolve to meet the emerging needs of the workforce.
This education industry article is adapted from the GLG Remote Roundtable “Study Australia — Competitive Outlook on Higher Education, Keypath, 2U, and IDP.” If you would like access to events like this or would like to speak with education industry experts like Pauline Farrell or any of our more than 900,000 industry experts, contact us.
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