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Onshore poaching of students by cheap colleges has cost Australian universities about one-third of a billion dollars a year, exacerbating a financial squeeze fuelled by inflation, rising compliance costs, tepid domestic demand and policies to discourage overseas students.

International education consultancy Studymove estimates that a dramatic downturn in the retention of foreign undergraduates after the coronavirus pandemic set universities back by some A$355 million (?173 million) in 2023 alone.

The retention figures represent the proportion of commencing foreign undergraduates who resume their studies the following year. The most recent Department of Education data shows a marked decline, with just 13 universities achieving 90-plus per cent retention rates from their 2022 admissions, down from 28 universities a year earlier.

Studymove director Keri Ramirez said the retention problems were primarily because of poaching of international university students by private colleges with degree-level tuition fees that averaged roughly A$15,000 a year, compared with A$35,000 at universities.

He said retention rates had fallen from 90.3 per cent to 82.1 per cent, on average, costing the sector some 10,000 returning students. ¡°After the first year, they just don¡¯t come back ¨C [it is] as simple as that. It¡¯s not only the loss in revenue. It is the amount of expenses that you put together for a group of students that is just not continuing. That¡¯s¡­an expense that you cannot remove that easily or adjust.¡±

Some financially struggling institutions have experienced severe downturns in international retention. Federation University¡¯s retention rate for overseas bachelor¡¯s students plunged from 90 per cent in 2021 to 51 per cent in 2022. Central Queensland University (CQU) recorded an even more dramatic collapse, from 81 per cent to 33 per cent.

Federation¡¯s spokeswoman said ¡°the exploitation of loopholes¡± had enabled ¡°unscrupulous providers¡± to lure its students away within the ¡°six-month protected period¡±, when foreign students are supposedly banned from switching institutions. But she said the university¡¯s ¡°targeted interventions¡± were stemming the flow, boosting Federation¡¯s retention rate to 63 per cent in 2023 and 96 per cent in 2024, based on its latest internal data.

CQU said the ¡°post-Covid landscape¡± had presented ¡°challenges¡± for student retention, but improvements in its ¡°tailored and personalised support¡± would ¡°deliver stronger outcomes into the future¡±.

The Group of Eight member institutions have managed to keep their published retention rates above 90 per cent, along with the University of Technology Sydney and Charles Sturt, Curtin, RMIT and Wollongong universities. Ramirez said students incurring the ¡°higher range of fees¡± appeared less inclined to squander their investment by jumping ship.

¡°It¡¯s unfortunately the other group of universities that is struggling. Sadly, it seems that some students think that they can replace the experience for lower fee options.¡±

The federal government attempted to stamp down on poaching through amendments to the Education Services for Overseas Students Act. They included a ban on commissions for onshore recruitment of international students, implemented through changes to a national code of practice. The government also planned to limit collusion between colleges and education agents, tighten initial registration arrangements for colleges and facilitate easier cancellation of courses with questionable delivery standards.

The amendment bill stalled in November and lapsed following the May federal election. While the government says it remains committed to strengthening integrity in international education, no new legislation has yet been introduced.

Educators say poaching could be significantly reduced through proper enforcement of existing rules, such as a requirement for overseas students to obtain fresh visas to switch from degrees to vocational courses.

john.ross@timeshighereducation.com