Australia’s higher education system is facing unprecedented challenges as new data reveals a concerning trend: just 62% of Australian students who enrol in universities are completing their degrees within six years. This striking statistic, uncovered by an analysis from the Institute of Public Affairs (IPA), has raised alarms about the state of the country’s universities and the increasing dropout rates among domestic students. The analysis found that, of the students who began a bachelor’s degree in 2017, 25% had dropped out by 2022, while another 13% were still studying. These figures paint a bleak picture of the current university landscape in Australia.
In stark contrast, overseas students, who pay full tuition fees and do not have access to Australia's HECS/HELP loan program, are outperforming their domestic counterparts. Over the same six-year period, 79% of international students had graduated, while just 19% dropped out and 2% were still enrolled. This divide between domestic and international student success rates has raised concerns about the growing reliance on international student revenue and the broader implications for Australia's education system.
The Growing Reliance on International Students
Australia’s higher education system has become increasingly dependent on international students over the past two decades. In the year 2000, approximately 95,000 international students were enrolled in Australian universities. By 2022, that number had surged to nearly 450,000, making up 29% of total university enrolments, compared to just 14% in 2000. The influx of international students has provided a critical financial lifeline for many universities, which now rely heavily on the tuition fees paid by these students.
This reliance has created a business model where universities prioritise international enrollments over domestic students. As a result, some argue that the focus on revenue generation has led to declining academic standards, a deterioration in campus culture, and an overall decrease in the quality of education provided to Australian students. This shift in focus has been blamed, at least in part, for the high dropout rates among domestic students.
Declining Completion Rates Across Key Disciplines
A closer look at the data reveals troubling trends in the completion rates of certain disciplines, particularly those critical to Australia's future workforce needs. For instance, the completion rate for students enrolled in veterinary science dropped from 89.9% between 2005 and 2010 to just 65.4% between 2017 and 2022—a decrease of 24.5%. Similarly, teacher education saw a dramatic decline in completion rates, from 70.3% to 51.1% over the same period.
Health-related disciplines, such as pharmacy, nursing, and health services, also experienced significant drops in completion rates. Pharmacy, for example, fell from a completion rate of 90.9% to 73.4%, while nursing saw a decline from 73.8% to 65.8%. These fields are of particular concern, given Australia’s aging population and the increasing demand for healthcare professionals.
Other disciplines, such as law, psychology, and engineering, also fared poorly. In law, only 61.6% of students who started their degrees in 2017 had graduated by 2022, down from 68.6% in the earlier cohort. Psychology saw a similar decline, with completion rates dropping from 62.8% to 57.5%. Engineering fared slightly better, with a drop of just 3.8%, from 63% to 59.2%, but the overall completion rate remains concerning, particularly given the critical role engineers play in infrastructure and development projects.
While some disciplines, such as medicine and dentistry, continue to boast high completion rates—91% for medicine and 88% for dentistry—these fields are the exception rather than the rule. The overall picture suggests a university system that is struggling to support students to the point of graduation, especially in fields that are vital to Australia's economic and social future.
The Impact of Remote Learning and Lower Academic Standards
Several factors have been cited as contributing to the high dropout rates among domestic students. One of the most significant is the rise of remote learning, which became ubiquitous during the COVID-19 pandemic. While online education offers flexibility and convenience, it also comes with significant challenges. Many students have struggled with the lack of direct engagement with instructors and peers, leading to feelings of isolation and disengagement. Furthermore, the quality of online instruction has varied widely, with some courses failing to meet the same standards as in-person classes.
Lower academic standards have also been blamed for the rising dropout rates. Universities, in their bid to attract more students—particularly international students—have been accused of lowering entry requirements and making it easier for students to pass courses. This has resulted in a university culture that prioritises quantity over quality, with students being pushed through to graduation without acquiring the necessary skills and knowledge to succeed in their chosen fields.
This decline in academic rigour has had a particularly negative impact on domestic students, many of whom feel that they are not receiving the level of education they were promised. The deterioration of on-campus culture, exacerbated by the influx of international students and the shift to remote learning, has only added to the problem. Domestic students who feel disconnected from their university experience are more likely to drop out before completing their degrees.
The Financial Burden of Dropouts
The financial cost of dropping out of university is another significant concern, particularly for domestic students who rely on Australia’s Higher Education Loan Program (HELP) to finance their studies. Students who drop out without completing their degrees are left with substantial debt but no qualification to show for it. This creates a situation where students are saddled with financial obligations that they may struggle to repay, particularly if they are unable to secure well-paying jobs without a degree.
The IPA analysis highlights this issue, stating that “a large and growing cohort’’ of domestic students is failing to finish university, leaving them with HELP debt but no degree. This not only places a financial burden on the students themselves but also represents a waste of taxpayer money, as the government subsidises these loans. The report argues that the current university model, which prioritises revenue generation over education, is exacerbating this problem by encouraging students to enrol in degrees they are unlikely to complete.
The Role of International Students in Australian Universities
While domestic students are struggling to complete their degrees, international students are faring much better. Over the six-year period from 2017 to 2022, just 19% of international students dropped out of their studies, compared to 25% of domestic students. This higher completion rate is likely due to the significant financial investment that international students make in their education. Unlike domestic students, international students must pay full tuition fees upfront and do not have access to government loans like HECS/HELP.
International students are also more likely to view their education as a pathway to permanent residency in Australia, providing them with additional motivation to complete their degrees. However, the increasing reliance on international students to fund Australia’s universities has raised concerns about the sustainability of this model. As international student numbers continue to rise, there is a risk that universities will become overly dependent on this revenue stream, to the detriment of domestic students and the overall quality of education.
The Government’s Response: Proposed Caps on International Student Enrolments
In response to these concerns, the federal government is attempting to pass legislation to cap new international student enrollments at 270,000 starting in 2025, which is in line with 2023 levels. This move is intended to address the growing reliance on international students and reduce the strain on university resources. However, critics argue that this policy does not go far enough in addressing the underlying issues within the higher education system.
The IPA has been particularly vocal in its criticism of the current university model, arguing that the rise in international student numbers has negatively impacted the university culture and contributed to the high dropout rates among domestic students. The report suggests that the focus on maximising revenue from international students has led to a cycle where domestic students are increasingly marginalised, leading to higher dropout rates and further reliance on international students to fill the gap.
The Future of Australian Higher Education: A Need for Reform
The data on university dropout rates and completion rates paints a clear picture: Australia’s higher education system is in need of reform. The current model, which prioritises revenue generation over education, is failing domestic students, many of whom are dropping out without completing their degrees. The rising reliance on international students, while financially beneficial for universities, is not a sustainable solution and may ultimately harm the quality of education provided to all students.
To address these issues, universities must refocus their efforts on supporting domestic students and improving completion rates. This may involve rethinking the role of online learning, raising academic standards, and fostering a more inclusive campus culture that prioritises education over revenue. Additionally, the government must take a more active role in regulating the higher education sector to ensure that universities are held accountable for their performance.
In conclusion, while international students play a valuable role in Australia’s higher education system, the growing dropout rates among domestic students are a clear sign that the current model is not working. To ensure the long-term success of the higher education sector, both universities and the government must take steps to address these challenges and create a system that prioritises education, equity, and student success.
