Last July, I wrote about the decline in international students in Australian universities. A Deloitte analysis showed a decline in 2010 and 2011, because of tighter visa rules, the strength of the Australian dollar and more international competition for students. And they were forecasting 2012 to be another weak year. Well, they were right.

The latest figures for 2012 are showing that there's been an 8.5% decline in international student enrolments in the year to the end of June 2012 (5% down in higher education, and 14% down in vocational education). It means a few things:

  • A hit of $1.3 billion to university and TAFE budgets
    This is an issue from a teaching perspective, where international students pay three to four times the fees that domestic students pay, and also an impact on university research, as international student fees contribute to research budgets in many universities. As The Australian put it recently "With federal funding for domestic students in short supply, international student feeds have cross-subsidised the education of Australians and the research output of our universities"
  • Education falls from being the third largest export industry to fifth largest, at nearly $15bn
    You know how the Australian economy has been supported by digging up bits of the country and sending it abroad (iron ore and coal are our two largest export industries). What was often forgotten by industrialists is that education – the incoming flow of funding from international students – was our third largest export. But now the slump in international students means that education has also moved down the table of export industries to fifth (below travel and gold).
  • International markets for higher education are getting more competitive
    As the Australian share of international students falls, other countries are growing – and this trend will continue as a new breed of countries start to challenge traditional choice countries such as the US, UK and Australia.
  • This is a long-term trend, rather than a one-off hit
    Although Deloitte forecast last year that things will start to get better after 2012, the total income from international students has fallen by over $3bn since 2009/10, when it stood at $18bn. It's going to take high growth to get us back to the levels of 3 years ago – and the factors that have affected the last 3 years (tighter visas, the strong Australian dollar and more international competition) are still there, putting a question mark over growth potential.

Learn MoreFor more background information, I'd recommend reading "The Internationalisation of Higher Education in Australia and the United States" from the United States Studies Centre at the University of Sydney Business School