Surging interest from overseas students is not necessarily translating into financial windfalls for Australian universities, but it is exposing them to potential regulatory action.

International ÖйúAƬ enrolments are approaching their pre-pandemic peak, while the number of newly arrived foreigners is already well above pre-Covid levels. Home affairs department statistics suggest the growth will only continue, with a record 274,000 applications lodged last financial year for visas to undertake bachelor¡¯s and master¡¯s degrees ¨C almost one-third higher than the previous record in 2018-19.

But there are doubts that the burgeoning growth will assuage universities¡¯ financial woes, after up to 30 of them registered deficits last year.

International education analyst Keri Ramirez said this was partly because overall foreign enrolments had not fully recovered from the pandemic. He said they were still around 30,000 or 8 per cent below pre-Covid levels.

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Meanwhile, profits appear to have been blunted by rampant discounting, with some 33 Australian universities offering ¡°scholarships¡± to foreign students, mostly for the full duration of their degrees.

Mr Ramirez said that before Covid, scholarships had mainly been designed to attract students who were especially talented or came from poor backgrounds. In 2017, when his Studymove consultancy began to track international student scholarships, very few universities were offering them as ¡°a discounting mechanism¡±.

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That has changed since the pandemic, with more and more universities seeking a competitive edge by offering fee reduction ¡°scholarships¡± of up to 30 per cent.

Mr Ramirez said 20 universities had scholarships of between 20 and 25 per cent, eroding their net earnings from international students by as much as 30 per cent. He estimated the cost of introducing a 20 per cent discount at A$5.4 million (?2.7 million) for a university that charged typical fees and admitted 1,000 foreign students a year.

The price tag would quickly snowball because of the multi-year nature of the scholarships, reaching A$16.2 million by the third year. In practice, the costs would be far higher because most Australian universities admit at least 2,000 new overseas students a year ¨C some?more than 10,000.

Mr Ramirez said the impacts of scholarships had now been neutralised. ¡°[If] a student¡­has an offer from five universities, and the five universities are offering 20 per cent scholarships, there is no competitive advantage,¡± he told a .

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¡°I¡¯m not saying this is wrong or right. Everybody is trying to do their best. But...in terms of microeconomics, when you have many, many, many players doing the same strategy, the strategy starts to dilute.¡±

Meanwhile, Australia¡¯s ÖйúAƬ regulator has put universities and colleges on notice over their recruitment, admission and support of overseas students.

In a letter to providers, Tertiary Education Quality and Standards Agency (Teqsa) chief commissioner Peter Coaldrake said several institutions were being investigated over issues such as ¡°unethical recruitment¡± and the rapid departure of students. He warned that international education obligations could be ¡°a focus in future re-registration assessments¡±.

The letter highlights the need for ¡°robust admissions¡± procedures and ¡°operational separation¡± between recruitment and admissions staff. Institutions must manage risks associated with ¡°rapid growth¡± and ¡°exposure in key markets¡±, Professor Coaldrake stressed.

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john.ross@timeshighereducation.com