Inflation “may impact” Australia’s attraction as study destination
Inflation is emerging as another key challenge to international education recovery in Australia, with providers being encouraged to be vigilant in their monitoring and proactive in their response.
The latest Key Data Update from StudyMove, The impact of inflation on international education, is showing strong positive signs in student visa applications and commencements, according to managing director Keri Ramirez.
“Since the announcement of the opening of the borders [in October], we have seen a very healthy, positive trend in the number of student visas launched for higher education in Australia,” he said.
“In fact, we are very, very close to pre-pandemic levels. We have about 2,000 visas short per month in comparison to those pre-pandemic levels. So that shows that for the second half of 2022 and the first half of 2023, in general, the market conditions are actually improving.”
Commencement numbers are also increasing, but are still yet to reach the peak of 94,000 which was recorded in 2019. Year to date there has been 67,000 commencements in Australia, which Ramirez says is a 10% increase in comparison to last year and a very healthy indication.
But it should be noted, he warned, that the current health of the sector is not strong, with the total enrolments actually decreasing. In March 2022 enrolment levels reached the lowest point in five years. He said this is a combination of lower new student numbers and continuing student numbers.
“Unfortunately, the ripple effects of Covid-19 are still affecting the sector. And it’s important to be aware of these because at the end of the day, the total number of enrolments is basically what will define the revenue that universities will get,” he explained.
“It’s important to be aware of these because at the end of the day, the total number of enrolments is basically what will define the revenue”
Another challenge that is becoming apparent is inflation.
“In March 2022, it was reported that Australia reached 5.1% inflation – so basically the consumer price index went up 5.1% in comparison to the previous year, which is the highest level that we had since 2000. And this was above any expectations.”
Ramirez also admitted it’s not a problem exclusive to Australia, with Canada experiencing a 7% increase in the same period; meanwhile, the US had an 8.3% increase, and the UK 9%.
“But it is a serious issue,” he continued. “It’s something that all around the world policymakers and the authorities are trying to tackle and I think it’s important that we start getting serious and put some considerations of how this affects our international obligations.”
He said the direct impact of inflation is pressure on the cost of living, which is a concern for the international cohort, consistently ranking in the top five issues in international student surveys.
“These things are really in the minds of international students, and we need to address this. Now, of course, we cannot control inflation, but I think that what is important is that we consider what we can do in terms of communicating changes and the cost of living.”
He said just providing students the official figure stated by the Australian government isn’t enough as it is not only out of date but does not take into account things such as location and student preferences.
“In 2019 the official living costs were $21,041, and that was a requirement to obtain a visa, not necessarily reflecting the actual cost of living. So this definitely needs to be updated.”
Ramirez explained this number is being used widely by providers but can create false expectations – and giving students more clear, comprehensive, and accurate information about the true cost of living is “very important”.
“Now I know that some providers don’t like to do this because it would actually scare off applicants but we have a responsibility and in fact, it’s in the national code that we need to provide the right information for international applicants.”
He suggested providers doing things like using a median price for housing rather than a range, and including current data about other elements such as food and utilities would give a realistic picture of what is needed.
“We have a responsibility to provide the right information for international applicants”
“We don’t want to have students having difficulties, especially now that prices are rising so we just need to have this consideration and understand some of the things that we could actually do just to minimise some of the effects that inflation could have on international students and applicants who are willing to come to Australia”.
He also urged providers to monitor the indirect effects of inflation such as currency exchange rates. “At the moment the exchange rate is about 10% less, which means that an American student, if they want to come to Australia will cost 10% less because of this fluctuation.”
Ramirez said while it doesn’t sound much, when you also factor in things such as scholarships that cover a percentage of fees, it could actually change students’ decision making processes.
“We actually have been very lucky that in the last probably five years we haven’t had to worry about the exchange rate that much but now it’s something that is going to play out and remain for the next at least 12 months and we need to consider all this and be aware of the implications.”
Ramirez said the sector is undoubtedly on the road to recovery however vigilance continues to be needed.
“We’re still dealing with these ripple effects created by Covid-19. The outlook is positive, but we just need to be aware of some things that we just need to tweak so we can actually continue the recovery of the sector,” he added.
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