A Chinese lesson for educators

While much media airtime has been given to the damage to Australia's educational reputation on the international stage from attacks on Indian students, of far greater concern is the impending failure of more private colleges, which could eat into our scorecard overseas, especially in our biggest international student market – China.

The markets for Chinese and Indian students in Australia are very different. In the year to October, there were around 149,000 Chinese students enrolled in educational institutions in Australia and 117,000 from India. But of all the international students at the top eight Australian universities, one third are Chinese. Only around 3 per cent are from India.

Education industry insiders tell Business Spectator that Chinese students tend to want a good quality education as their first priority and residential status as a secondary benefit. They are helped, to a degree, by China's one-child policy, which means families can pool financial resources for that one individual and pay for universities. However, the situation is reversed for Indian students, many of whom seek residential status as their primary objective. This is the reason that such a large number of Indian students are at private colleges – like Meridian, the college bought by Cayman Islands-based SinoEd Group that shut its doors earlier this year after going into voluntary administration, leaving thousands of students in the lurch.

But after years of complaints about the apparent ease with which a student visa can be obtained for those whose main intent is not to study, government officials are finally clamping down, which will result in future contractions in the flow of students from markets like India, and of course some from China and other countries. This means that more Australian private colleges are likely to fail in the coming months – some estimates put this number in the dozens.

While the Indian market for international students has been gripped by a recent spate of assaults on their students in Australia, this doesn't concern the Chinese populace. Partly because they're not being targeted in the same way and partly because historical cultural divisions between India and China means there's not a lot of love lost between the two nations.

But Chinese citizens are terrified of losing the hundreds of thousands of dollars they pay for their children to come and study at Australian institutions, if those institutions close their doors, before or during the period of study. Australian officials who recently visited some Australian students on exchange were baled up by Chinese parents wanting to know whether the reverse part of the exchange would take place. Given that the arrangement had been put in place by an Australian university, the differences were explained and they were assured that the exchange would be completed in full.

Differentiating between failing private colleges and Australia's universities is a key challenge for the Australian government and one they are facing head on. Australian Education International, the overseas arm of the Department of Education, Employment and Workplace Relations, has been working overtime, with numerous announcements being put out to Chinese media organisations. The Chinese government has also been helpful in this regard, although they may not want to publicise the collapse of Meridian too much, given that the owner was, in fact, a Chinese national.

Despite a rising Australian dollar, especially against the US currency to which China's yuan is pegged, Chinese student numbers are expected to rise, with strong demand already showing in the pipeline. Chinese GDP forecasts are back to healthy levels, meaning wealth is on the rise, as is the ability to pay the sky-high cost of sending your child to an Australian university on full fees, not to mention the higher living expenses.

According to international student placement company IDP Education's report Global Student Mobility: An Australian Perspective Five Years On published in 2007, between 2005 and 2025 Chinese enrolments in Australian higher education will more than double, with an annual compound growth rate of around 4 per cent. While India doesn't yet have the same level of personal wealth as China, it was also expected to post massive growth in student numbers in Australia, with an annual compound growth rate of 4.7 per cent, but the tighter visa restrictions that have emerged are likely to stymie this growth trajectory.

To prevent further damage to Australia's reputation, the Australian government must move to immediately assess the situation of the remaining private colleges. Behind closed doors, the academic community has long been criticising the government for bowing to pressure from private business in allowing so many privately run colleges to open their doors. These colleges are now finding that their business models are not viable, as the flow of students dries up. If the government wants to minimise the damage to its relationship with China, and indeed India and other nations from which our international students hail, such as Korea and Thailand, they need to contain this threat and then minimise its fallout.