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Education is big business. It's Australia's fourth largest export and there are more than 800,000 international students here right now. But this $50 billion industry has a problem. It's losing some of its best customers. Chinese students have helped prop up the university system, but applications dropped 12% in the 2024 financial year, and they fell another 25% by the end of 2025. So, how did we get here? Where are students going? And what does it mean for the future of our universities?
Most Australians take the small Chinese community here for granted, but it wasn't always so. The majority come because their parents feel they'll get a better education in uncrowded Australian universities. >> They are what our founding fathers never dreamed of. Asians with an Australian accent, or you could say fair dinkham Asians.
Chinese students first arrived in Australia more than a 100red years ago, but university reforms in the 1990s laid the foundation for what would become a massive industry. Before the millennium, there were just 130,000 enrollments. By the pandemic, it was closing in on a million. And today, a quarter of those students are from China.
I came to Australia as a international student 24 years ago to study high school. >> This is Sha Dong. He's an immigration lawyer. >> I've also been involved in the international um education industry for the last 16 years. >> When Sha came to Australia, China was on the rise and a western education was seen as a ticket to success. >> Very difficult to get in top ranking universities in China. Very very competitive. So Australian provides good international education but at the same time it is approachable graduates with a overseas degree. They are very competitive in Chinese job market but we've been seeing a the trend has been changing.
When Australians are thinking about study they might think about what they want to do, what their interests are, which uni has the best parties. But international students have to think about return on investment because studying is a huge investment. An undergraduate degree can cost as much as $65,000 a year. And that's before the tens of thousands needed for food, rent, and living expenses. So if you have to spend hundreds of thousands of dollars just to study here, it better be worth it. For generations of Chinese students, it was. You could land a great job in China or even try and settle in Australia, but it's getting much more expensive to study and much harder to find work.
The rise of artificial intelligence is also making some students question whether it's worth studying a profession that might not exist in the future. And some Chinese employers are questioning the value of an international education. state-owned companies, they are more reluctant to hire graduates from overseas. The Chinese economy is slowing down as well. Graduates can't find job easily. So that our is getting worse and worse day by day.
It's not just that some students are rethinking Australia, other countries are competing to get them. This is the QS World University Rankings. It ranks unis based on factors including reputation, student experience, employability, and research. The rankings are dominated by the west. In the top 50, there are six unis from Australia, seven from the UK, and 15 from the United States, but Asia is catching up. Since 2010, the number of Chinese unis in the top 50 jumped from 4 to 8 and countries like Singapore, Japan, and Korea are also gaining ground.
Postgraduate study, Chinese Hong Kong is the most popular choice in these days. >> This is Hazel. Her company has helped more than 500 Chinese students study abroad, but nowadays Hong Kong is a popular alternative. >> Firstly, the field is safe. the cost is lower. And thirdly, the Hong Kong universities are well known in Chinese companies. It still is tough to get into China's best universities and some students are not just looking for prestige. >> Some of them just want to experience a different culture. They are seeking for another lifestyle. They feel like maybe Australia is more work life balance.
At this stage, there's still plenty of Chinese students who want to study in Australia. Overall, higher education enrollments were up 10% in 2025, largely driven by new enrollments from places like India. So, should universities be worried? This is a report from the ratings agency Moody's. It's a little dry, but the message is clear. There's trouble ahead. A long-standing reliance across all countries on Chinese students is being eroded by China's aging and shrinking population and the rising competitiveness of Chinese universities.
Australian universities are increasingly reliant on foreign students. revenue grew 10% every year until the pandemic and it now makes up a quarter of their entire budget. Additional pressures such as currency volatility, household income difficulties, and geopolitical tensions could further constrain outbound student mobility. So, China is facing increasing demographic, economic, and geopolitical challenges and all of that is making it harder to travel overseas. Right. The demographic decline is occurring, but there's still 80 to 90 million 15 to 19 year olds. So, we still think that there's going to be a continued flow, probably not to the extent uh that we have um seen in the past, but there will continue to be that overall demand.
To deal with these emerging challenges, some unis are diversifying. India, Indonesia, the Philippines, Malaysia, and Vietnam have millions of young people and an expanding middle class. That's a lot of new customers. So, universities are building new partnerships and opening campuses across Asia. The Peak Body for Universities says China will remain one of Australia's most important education and research partners. Diversification matters, but it should strengthen the sector, not come at the expense of any existing long-standing relationships.
Unis can try to end their reliance on China. But some things are out of their control. Rising cost of living has sparked a rethink of immigration policy, and Australia has introduced student caps, tightened standards, and doubled some fees overnight. All of that could damage our reputation and ultimately make it much harder for those who want to come to Australia to study, to work, to build a new life. My honest opinion is, okay, here's my honest opinion. The reason Australia is less competitive uh in terms of getting Chinese students is the uncertainty of migration pathway. I understand why the government is trying to break the link between education and migration. I don't think it is necessary to make migration easy. It would be helpful to make it predictable. I chose to study Australia um when I knew there's a possibility to stay here permanently.