Int’l students keeping Australian HE sector afloat, say leaders in face of uni deficits

Over 40% of Australia’s universities have spent most of the past five years in deficit, says a new report from Universities Australia. Its findings pour cold water on the misconception that the higher education system is “awash with money”, according to chief executive officer Luke Sheehy.

“The numbers tell a very different story,” he said, pointing out that more than four in 10 universities being in the red represents a “warning sign”.

“You can’t ask universities to educate more students, deliver more research and drive productivity while steadily reducing funding per student. At some point, the maths catches up,” said Sheehy.

Universities Australia said that international students provide about a quarter of universities’ revenue, contributing over AUSD $51 billion to the Australian economy.

International students have long “helped keep the system afloat” as domestic funding has fallen in real terms, Sheehy said – but the report warned that growing policy uncertainty risks stymying a reliable income stream for cash-strapped universities.

“International education has helped keep the system afloat as domestic funding has fallen in real terms. That’s not ideology – that’s arithmetic,” Sheehy said. “Turning a national export success story into a political problem risks weakening one of Australia’s strongest economic assets.”

International students have drawn nationwide attention as numbers hit their peak last year – reaching 833,041 in January-October 2025 – representing a 70% surge on 2022’s post-pandemic low.

Turning a national export success story into a political problem risks weakening one of Australia’s strongest economic assets
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The Australian sector has weathered a barrage of restrictive immigration policies in recent years as the Albanese government seeks to control the number of people coming into the country.

In 2024, Australia capped new international enrolments at 270,000 as a way to manage growth and assets like students accommodation. Last year, it raised the cap to 295,000 new international enrolments, but institutions had to hit certain targets – such as engaging with Southeast Asia and proving they had sufficient accommodation – to qualify.

But according to Universities Australia, average funding for each Commonwealth-supported domestic student has fallen 6% in real terms since 2017, even though enrolments have grown.

Some 16,000 stuent places at around 14 universities receive no commonwealth subsidy, it said, and funding for at least 17,000 places is being paid to institutions that are not delivering that student load.

“Our universities are not just economic engines – they are places where people build their futures, where talent is nurtured and where opportunity is expanded for the next generation,” said Universities Australia chair Carolyn Evans.

“We want our communities to benefit from the employment, facilities and opportunities that local universities bring. That’s why we need a healthy, financially sustainable university system – to support individuals to grow and succeed and for our nation to prosper.”

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