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Information on declining international student enrolment in Australia makes front page news in Sydney. And it should. International student spend in Australia, totaling $13.1 billion in 2008-09, is the nation's third largest export after iron ore and coal according to the Australian Bureau of Statistics. In December 2009, Australia had 630,000 international students enrolled in higher education, vocational training, English language training, foundation courses and secondary schools. Earnings from international students have grown at 19% a year over three years, until 2010, growing by 23% during the recessionary year of 2008-09.
This year, the figures are not so good. According to data from Australian Education International (AEI), course commencements for the four months to April of 2010 are down 3.3% compared to the same period last year, driven largely by a 17% slump in ELICOS (English language intensive courses for overseas students) and a 3.8% decline in VET (vocational education and training) sector.
The Australian press is attributing the decline in international student commencements to tighter visa regulations. An analysis of Australian government data on international student commencements in 2010 done by The Parthenon Group's Education Center of Excellence, suggests that the slump in commencements may be driven by security concerns as opposed to changing visa and immigration law. The decline in international students is driven 100% by South Asians (Indians, Sri Lankans, Nepalis, Bangladeshis and Pakistanis) who have been affected by racial violence in Australia while populations of other nationalities continue to grow.
In 2009, Indians accounted for a fifth of total international student enrollment. It is the second largest nationality after the Chinese among international students in Australia. If you count all South Asians, they account for a quarter of total enrollment. Over the last two years, while the total enrollments have grown at 18% annually, South Asians were increasing at double that rate: 36% annually.
In total, South Asian commencements in Australia have declined 29%. If the trend continues for the rest of 2010, there will be a decline of 43,000 South Asian students compared to 2009, resulting in a loss of $730 million in export revenue.
Australia has always been an attractive destination for South Asian students given its lower tuition fees and more affordable cost of living as compared to the U.S. or U.K. The number of South Asians wanting to study abroad is not likely to decrease in the immediate future provided that affordability and demand is rising in the home countries whereas the supply of quality institutions at home cannot keep up. A foreign degree usually also means a pathway to immigration.
So will U.K., U.S. or Canada see a 40,000+ inflow of South Asian students in 2010 while Australia loses its edge? It's time for Australia to start paying attention.
(The author is a senior associate at the Parthenon Group's Mumbai office) This article (Indian Students Give Oz a Pass) appears in the July 16 issue of Forbes India, a Forbes Media licensee.
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