Simon Marginson: Education in the Global Market

Simon Marginson: Education in the Global Market
Lessons From Australia

Recent changes in funding have encouraged Australian universities to market their programs overseas. The commercialization of university degrees has had some unexpected, mainly negative, consequences.

Australia is a medium-sized country with a system of higher education similar to that of the United States. But there is one dramatic difference. Nearly one Australian student in every five is a foreigner, mostly from East and Southeast Asia, paying full tuition. International education is now crucial to the financial health of Australian universities, providing $1 in every $10. It is run not as a process of cultural exchange or as a subset of research or foreign policy aims, but as a fully commercial business.

Foreign education has become the source of additional revenues for universities that have been subjected to accumulated cuts in public budgets. American public institutions also face declining state revenues, and some will probably target foreign students as a source of supplementary revenues. The Australian experience might provide something of a guide for these universities—and a salutary warning.

Worldwide, the number of students who attend college in a foreign country has doubled since 1980. It is expected to double again this decade. The United States is the world’s largest provider of education for foreign students, followed by the United Kingdom, Australia, France, Germany, and Canada. International education is, however, relatively marginal to American higher education; it accounts for only 3.5 percent of total enrollment, although in certain graduate research disciplines, foreign students provide essential labor. The United States has seventeen times the population of Australia but less than four times the number of foreign students.

In the second half of 2001, among Australia’s 143,788 foreign university students, 91,285 were on a campus in Australia; 39,616 were either on one of the offshore campuses Australia administers in Malaysia, Singapore, Vietnam, and South Africa or enrolled in a foreign partner institution offering Australian degrees; and 12,887 were enrolled in one of Australia’s distance education programs. Distance education is the fastest-growing sector in Australian higher education. The World Bank recently announced a $1.3 billion joint program with Australia to develop online education for African and Asian countries.

Enrollments of foreign students have grown by 15 percent a year for more than a decade. Australia is the largest foreign provider of higher education in Singapore and a key player in the emerging market in China. In some Australian institutions, nearly a third of all students are international—one university earns 25 percent of its total revenues in this market. Tuition paid by foreign students provides not just additional discretionary revenue: it has become central to maintaining core funding. The downside of increased enrollments among foreign students is that most Australian universities now fundamentally depend on the global market.

How did it happen? In the mid-1980s, when Australian universities received 85 percent of their funding from public sources and charged no tuition fees, the national government changed its policies to facilitate international education. The government saw the potential for developing a new export industry, while also hoping that Australian universities would help Australian business to become more effectively engaged in Asia. Australian embassies in Asia were mobilized to help recruit students, and universities were encouraged to adopt business-based strategies.

The government gave universities the freedom to charge and retain full-cost tuition, and it reduced per-student public funding of universities. Institutions suddenly had a powerful motive to recruit foreign students. Throughout the 1990s, public funds remained scarce: per-student public funding in Australian universities is now at half the level of fifteen years ago.

Australian universities quickly became aggressively entrepreneurial, and their business-related functions, pursued behind and around the academic functions of teaching and research, began to dwarf traditional faculty activity. In the past fifteen years, there has been an immense growth and professionalization of functions such as marketing and recruitment, offshore operations, finance and asset management, and quality assurance. Nonfaculty staffing has grown faster than academic staffing and now accounts for almost two-thirds of all labor hours in Australian universities.

At the same time, Australian education has benefited from a price advantage over other English-language countries, primarily because of the depreciation of the Australian dollar relative to American and British currencies. As a result of the cheaper Australian dollar, tuition is at roughly half American levels, while Australian living costs are at 70 percent of American and British levels.

By far the greatest growth in enrollment has been in business studies and related disciplines and in information technology—fields that attract students searching for globally transferable skills. Two-thirds of all international students graduate in one of these disciplines, and half of the students in master’s programs in business (the fastest-growing subsector) are foreign. Many faculty members in business and information technology have become as entrepreneurial as the business managers working alongside them. In the more traditional disciplines and older professions, foreign students tend to play a much lesser role.

Most of Australia’s international engagement is one way. As in the United States, the university curriculum is mono-linguistic and largely monocultural. While there is much talk of "internationalizing the curriculum," changes are confined largely to the wider use of foreign examples in content. Australian students have been rather slow to move to other countries for their studies. Research on international education suggests that the level of cultural mixing is low and that foreign students are required to adjust to Australians rather than vice versa. Despite this finding, the growth of international education generates many positive effects. A more cosmopolitan environment on campus is educationally enriching, and, in the long term, will help build bridges to the countries to Australia’s north.

Yet the highly commercial nature of the program has produced some serious negative effects. Australian higher education has become so dependent on foreign students that a downturn in market share—caused, for example, by depreciation of the U.S. dollar or more vigorous recruitment by competitor countries—would leave some Australian institutions in serious difficulty. The growth in numbers of students may be remarkable, but the situation is more fragile than it looks.

Worse, in an environment of growing dependency on foreign students, those disciplines unable to attract foreigners are already fragile. Business and information technology schools have plenty of cash for new staff and advanced technologies. Most other disciplines remain largely tied to the shrinking public dollar, so they are struggling. There is little redistribution from business and information technology, because that would cut into their profitability and competitiveness. Market revenues are ploughed back into the market-strong areas or used to augment the corporate side of university operations. In many universities, basic disciplines in the humanities, social sciences, and sciences (apart from biomedicine) are in real difficulty.

The overall student-staff ratio in Australian universities has risen from 13 to 1 in 1990 to 19 to 1 in 2001, creating significant downward pressures on quality. The total income received by institutions of higher education has been sustained, but the new private revenues are used for different purposes than the old public revenues that they "replaced." The commercialization of foreign education has been accompanied by the intensification of faculty work—involving both more teaching per hour, judging by class sizes, and longer total hours of work—and a profound shift in university values, especially in some of the newer institutions. Disciplines unable to generate short-term revenues have lost status in the eyes of university leaders. In addition, the commitment to scholarship as an end in itself has faltered, even among some faculty. Australian public universities now operate according to a commercial imperative stronger than that found in American public and private nonprofit universities.

In Australian institutions, international education has been shaped largely by university leader-managers—particularly entrepreneurial presidents and marketing units—rather than by faculty. To seize niche markets, some universities have developed new programs almost overnight without much regard for shared governance or faculty ownership of the curriculum.

Australia’s success in generating commercial revenues has facilitated the reduction in the public investment crucial to the long-term quality of higher education. If Australia had expanded foreign education while at the same time sustaining its public investment in universities, the long-term outcome would have been much more promising. Instead, the downturn in public investment has placed the quality of teaching and research—on which Australia’s global reputation ultimately rests—in question.

Australia can reverse the downward slide, but it will need to shift its unhealthy dependence on the market, which will now require a major cultural change. The lesson for the United States is that it is important to sustain the balance between commercial and academic objectives, between private and public goods, and between faculty members and leader-managers.
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Simon Marginson holds a chair in education at Monash University in Melbourne, Australia. He is director of the Monash Centre for Research in International Education, editor of the Australian Journal of Education, and the author, most recently, of The Enterprise University with Mark Considine.

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