Education in the global market: Lessons from Australia

Academe, May/Jun 2002 by Marginson, Simon

Recent changes in funding have encouraged Australian universities to market their programs

overseas. The commercialization of university degrees has had some unexpected, mainly negative, consequences.

Australia is a medium-sized country with a system of higher education similar to that of the United States. But there is one dramatic difference. Nearly one Australian student in every five is a foreigner, mostly from East and Southeast Asia, paying full tuition. International education is now crucial to the financial health of Australian universities, providing $1 in every $10. It is run not as a process of cultural exchange or as a subset of research or foreign policy aims, but as a fully commercial business.

Foreign education has become the source of additional revenues for universities that have been subjected to accumulated cuts in public budgets. American public institutions also face declining state revenues, and some will probably target foreign students as a source of supplementary revenues. The Australian experience might provide something of a guide for these universities-and a salutary warning.

Worldwide, the number of students who attend college in a foreign country has doubled since 1980. It is expected to double again this decade. The United States is the world's largest provider of education for foreign students, followed by the United Kingdom, Australia, France, Germany, and Canada. International education is, however, relatively marginal to American higher education; it accounts for only 3.5 percent of total enrollment, although in certain graduate research disciplines, foreign students provide essential labor. The United States has seventeen times the population of Australia but less than four times the number of foreign students.

In the second half of 2001, among Australia's 143,788 foreign university students, 91,285 were on a campus in Australia; 39,616 were either on one of the offshore campuses Australia administers in Malaysia, Singapore, Vietnam, and South Africa or enrolled in a foreign partner institution offering Australian degrees; and 12,887 were enrolled in one of Australia's distance education programs. Distance education is the fastest-growing sector in Australian higher education. The World Bank recently announced a $1.3 billion joint program with Australia to develop online education for African and Asian countries.

Enrollments of foreign students have grown by 15 percent a year for more than a decade. Australia is the largest foreign provider of higher education in Singapore and a key player in the emerging market in China. In some Australian institutions, nearly a third of all students are international-one university earns 25 percent of its total revenues in this market. Tuition paid by foreign students provides not just additional discretionary revenue: it has become central to maintaining core funding. The downside of increased enrollments among foreign students is that most Australian universities now fundamentally depend on the global market.

How did it happen? In the mid-1980s, when Australian universities received 85 percent of their funding from public sources and charged no tuition fees, the national government changed its policies to facilitate international education. The government saw the potential for developing a new export industry, while also hoping that Australian universities would help Australian business to become more effectively engaged in Asia. Australian embassies in Asia were mobilized to help recruit students, and universities were encouraged to adopt business-based strategies.

The government gave universities the freedom to charge and retain full-cost tuition, and it reduced per-student public funding of universities. Institutions suddenly had a powerful motive to recruit foreign students. Throughout the 1990s, public funds remained scarce: per-student public funding in Australian universities is now at half the level of fifteen years ago.

Australian universities quickly became aggressively entrepreneurial, and their business-related functions, pursued behind and around the academic functions of teaching and research, began to dwarf traditional faculty activity. In the past fifteen years, there has been an immense growth and professionalization of functions such as marketing and recruitment, offshore operations, finance and asset management, and quality assurance. Nonfaculty staffing has grown faster than academic staffing and now accounts for almost two-thirds of all labor hours in Australian universities.

At the same time, Australian education has benefited from a price advantage over other English-language countries, primarily because of the depreciation of the Australian dollar relative to American and British currencies. As a result of the cheaper Australian dollar, tuition is at roughly half American levels, while Australian living costs are at 70 percent of American and British levels.

By far the greatest growth in enrollment has been in business studies and related disciplines and in information technology-- fields that attract students searching for globally transferable skills. Two-thirds of all international students graduate in one of these disciplines, and half of the students in master's programs in business (the fastest-growing subsector) are foreign. Many faculty members in business and information technology have become as entrepreneurial as the business managers working alongside them. In the more traditional disciplines and older professions, foreign students tend to play a much lesser role.