Universities are facing the prospect of financial upheaval after the federal government announced that international student numbers would be capped and tied to building new accommodation.
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The new policy in the 2024-25 federal budget has been framed as a way to ensure international students don't contribute to wider housing pressures, but universities are cautious about what this means for one of their key revenue streams.
University of Canberra interim vice-chancellor Lucy Johnston said linking international student numbers to increased student housing was a very blunt way of regulating enrolments.
"It certainly may be a factor, but certainly not the only factor influencing housing shortages," Professor Johnston said.
"For example, we already guarantee all our international students accommodation on campus and managed accommodations."
The University of Canberra had about 2800 international students enrolled last year, which made up 25 per cent of the total student population.
Professor Johnston said the sudden changes in government policies made it difficult for universities to plan their budgets strategically across a number of years.
"International students pay higher fees than domestic students and universities use that in different ways. Some use it to increase research funding, some use it to improve infrastructure, some use it for additional students support and so on," Professor Johnston said.
"But however we use it, the university sector has been comfortable having that... what do we fill that gap with?"
Australian National University students' association international officer Rishika Agrawal said Australia was at risk of losing its image as a welcoming country for overseas students.
"All the conversations I've had with people there seems to be a feeling of hostility towards Australia right now in terms of contemplating whether they want to come to Australia for further study," Ms Agrawal said.
She said international students found it harder to find affordable accommodation amid work restrictions. On-campus accommodation was very expensive while off-campus housing was hard to get without a rental history.
"We don't need more accommodation. We have plenty of accommodation from what I know, we just need some places where rent is not completely out of our budget," she said.
Australian National University professor in the practice of higher education Andrew Norton said capping the number of international students by course could cause "serious problems".
"What this will mean in practice, I think, is that the number of students will be much lower than the cap, because the caps will restrict them to courses they don't want to do," Mr Norton said.
READ MORE BUDGET COVERAGE:
Pushing international students into education and health should be discouraged, Mr Norton said, because of the finite number of work placements available and the risk that students will return home with the skills Australia needs.
Mr Norton said high fees paid by international students have been used to prop up research in Australia and so research output was likely to drop over time if that income stream was reduced.
He said the frequent policy announcements would have a "significant negative effect" on overseas students wanting to come to Australia.
Treasurer Jim Chalmers said the exact formula for working out the international enrolment caps and timing on the policy was still to be worked out in consultation with universities.
"We would like universities to be willing partners in building more homes, in their cases, for students and in our case for Australians more broadly," Mr Chalmers told the Press Club on Wednesday.
"I think that there is a recognition that there's a shortage of student accommodation that is putting pressure on housing. It's not the only reason there is pressure on the housing market but it is a reason."
The budget included a suite of other measures to begin implementing the Universities Accord recommendations.
The government will pay for more fee-free courses to prepare students to go to university, set up an Australian Tertiary Education Commission, will wipe $3 billion in student debt by changing the way indexation is calculated and will pay teaching, nursing and midwifery students doing mandatory work placements.