International education has become a vital industry for the Australian economy, in recent years rivalling coal and iron ore as one of our largest export industries. But the way we’re calculating international student enrolments could be giving a misleading view of the stability and health of the industry.
Australian Education International (AEI) is a government body which deals with the international student sector. For May 2011, its statistics show a 2.3% increase in international student enrolments in higher education from May 2010. The March statistics also boasted a 3.6% increase.
These statistics led some to believe that there was resilience in the sector because of these increased enrolments. But these numbers, while technically true, could be misleading about the stability in the sector. In fact, any comfort drawn from this notional increase would be entirely misplaced.
AEI compiles figures around enrolments and commencements. Enrolments are students studying a course. A commencement is a new student enrolling in a particular course at a particular provider.
Enrolments are all well and good, but what really matters in terms of predicting the future health of the industry is commencements. This is because, to remain stable, you’ve got to commence more students than you are graduating. Otherwise, over time, the total number of students enrolled decreases.
Of the data around commencements, February commencements are the most important. This is because most students start their courses at the beginning of the calendar year.
If we look at the AEI’s February commencements figures for both the higher education (HE) and vocational sector (VET) it looks like this:
What is most striking about this is the 67 per cent increase in higher education commencements in February 2011 from February 2010.
So what’s happening? Is this increase a true picture of how many new international students are actually enrolling at universities?
There are two parts to answering this question; firstly, one must look at the consequences of changes in skilled migration regulation. And secondly, this increase can be explained by internal transfers within Australia between vocational education and higher education. These are called “onshore transfers”, meaning when a student transfers from one course to another while they are in Australia. In doing so, they are subsequently counted as if they were a new student.
While there is disagreement about how much the changes to skilled migration have affected the industry, there certainly has been some influence. This is acknowledged even by the government’s own Discussion Paper for the Strategic Review of the Student Visa Program.
The changes to skilled migration have the effect of closing the pathway previously available to prospective migrants from vocational education to permanent residence. At the same time, they encourage students to go through higher education. This is particularly the case for prospective migrants who are a little older, have better English language skills, and higher qualifications. The shift in the pathway can be seen in DIAC’s new points test, which came into effect on 1st July.
That these commencing students are also onshore transfers is supported by looking at DIAC’s Population Flows for 2009 to 2010.
This shows (p.46 - 49) the changes in where and how many student visas were granted, that is, off-shore, or on-shore.
This data shows higher education onshore grants grew by 16.6% between 2009 and 2010. Again, these are students already in the country, just moving around internally.
But off-shore higher education student grants, that is, new students recruited from outside Australia, actually fell by 24.9%. (VET off-shore grants fell by 59.4%). All sectors combined saw a drop in off-shore grants of 30.6%.
This drop in HE off-shore grants aligns closely with the predicted 23% drop in commencements for 2011 predicted by Deloitte Access Economics in a report prepared for Universities Australia.
Now to a University’s marketing department, any new student is a good student. But for the industry’s ongoing stability it is off-shore grants that matter. They are the students who will be coming to replace those who are graduating.
The big markets for international education are India and China. Off-shore student grants from China dropped by 8.6%. Off-shore grants from India dropped by a whopping 77.1%
Though both of these figures are for all sectors, they paint a more realistic picture of what is happening in the higher education sector.
The extent of student ‘churn’ can be sensed by knowing that on-shore grants to Indians rose by 57.7%, and on-shore grants into vocational education by 25.7% - but again, these are not signs of a healthy industry, far from it, they are symptoms of an unsustainable instability.
Also, the above DIAC figures end at the end of 2010. They do not include data underlying the February 2011 commencements. As such, the DIAC figures are out of date, but provide a clear indication of what was happening in the lead up to the massive increase in commencements into higher education in February 2011.
It is also worth remembering that neither data set distinguishes between Universities and other providers of higher education.
By conflating on-shore and off-shore visa grants the picture for higher education does not look so bad. But when you understand that nearly all the ‘growth’ is actually just on-shore transfers making up a shortfall in off-shore enrolments, the picture becomes more bleak.
And while off-shore grant numbers show a much grimmer scenario, it is one that is entirely in line with DIAC’s stated aim of decreasing the impact of international students on net overseas migration in Australia from 494,000 in 2010 to 149,000 by 2014. But that’s another story.