Imagine … Imagine that the International Students Stayed Home! By Professor X

Imagine a scenario where, starting around 2027-2028, Australia's international students collectively decided to stay home. No more arrivals from China, India, Nepal, Vietnam, or elsewhere. The massive pipeline of overseas enrolments dries up overnight. Universities, which had come to depend heavily on these high-fee-paying students, face a sudden revenue cliff. What happens next? The government — facing political pressure from domestic voters, regional economies, and the need to maintain a world-class higher education system — would almost certainly have to step in with a more rational, sustainable funding model for universities.

Australia's universities have long operated on a precarious cross-subsidy system. International student tuition fees contribute around 25-28% of total sector revenue in recent years, often exceeding A$12-13 billion annually. This money doesn't just cover the costs of teaching those students; it subsidises domestic teaching, funds unfunded research, pays for infrastructure like new buildings and labs, and supports thousands of academic and professional jobs. Domestic students (Commonwealth-supported places) generate far less revenue per head — roughly half or less than international ones — while government funding has steadily declined as a share of total income, dropping to historic lows around 45-46% in recent years despite absolute increases in some areas.

Without international fees, the sector would face immediate shortfalls in the billions. Many institutions, especially the research-intensive Group of Eight (Go8) universities, derive 30-47% of their student load or revenue from internationals. Smaller or regional universities would be hit hard too, with some already warning of deficits, program cuts, staff layoffs, and even potential closures in extreme cases (as seen in COVID-era hypotheticals). The broader economy would feel it: international education has been one of Australia's top exports, pumping tens of billions into local spending on housing, retail, and services.

In this "stay home" world, the federal government couldn't simply let top universities shrink or collapse. Higher education isn't optional — it's essential for skills training, innovation, R&D, and long-term economic competitiveness. Australia needs more graduates to meet projected workforce demands (e.g., doubling Commonwealth-supported places by 2050 in some forecasts). Research output, crucial for global rankings and national security/tech advancement, relies on the cross-subsidies internationals provided.

The rational response would force a rethink of the entire funding architecture:

Directly increase base funding per domestic student. Governments would need to lift per-student subsidies for Commonwealth-supported places to close the gap left by lost international revenue. This could mean reversing the real-terms decline in funding per place seen over the past decade (e.g., from Job-ready Graduates package effects) and aligning closer to OECD averages for public investment in tertiary education.

Boost overall public investment. Calls from Universities Australia and others for re-establishing something like the Education Investment Fund (axed in 2019) would gain urgency. More dedicated capital for infrastructure, higher R&D block grants (currently well below OECD norms at ~0.49% of GDP vs. 0.74% average), and better support for indirect research costs would become non-negotiable.

Rebalance priorities away from revenue-chasing. Without the incentive to maximise high-margin international enrolments, universities could refocus on quality over quantity. Less aggressive marketing overseas, fewer "revenue, profit, and competition" pressures (as critics like the NTEU have noted), and potentially more equitable access for domestic students from underrepresented groups.

Address inefficiencies and bloat. A funding crunch might push reforms: trimming administrative overheads, reducing reliance on casual/sessional staff exploitation, and ending practices where international fees prop up questionable expansions. It could lead to a more transparent, needs-based model rather than the current patchwork.

Of course, this wouldn't be painless. Short-term pain would include job losses in university towns, reduced research momentum, and possible program rationalisations. Housing pressures in cities like Sydney and Melbourne might ease slightly without the influx, but the sector's contribution to GDP and exports would take a hit. Politically, it would expose decades of successive governments quietly offloading funding responsibility onto fee-paying foreigners while claiming credit for a thriving education export industry.

In the end, though, a world without international students staying home might ironically deliver what many academics and unions have long demanded: a more stable, publicly accountable, and rationally funded university system. One where teaching and research aren't perpetually held hostage to volatile migration flows, visa policies, or geopolitical events. The government would have no choice but to pay up properly — because letting the lights dim on Australia's universities isn't an option in a knowledge economy.

The hypothetical forces the question: why wait for students to stay home? If the current model is unsustainable and distorts priorities, perhaps the rational funding overhaul should happen proactively — before the next crisis like COVID forces it anyway.