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Rising Australian dollar, inflation discourage foreign university students

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Release date: 02 Feb 2011
But now Australia's appeal to foreign students is under threat from the surging cost of studying in the country.

Education is the nation’s largest service export - valued at close to $20 billion a year – and the sector is the latest to suffer the downside of the high value of the Australian dollar. After years of unbroken growth, the number of student visas issued slipped in 2010.

Said Bill Evans, Westpac’s chief economist: “We need to keep growing those places where we have a competitive advantage, like education, and this is a disturbing trend.”

An immediate loss of income is only half the issue. Some of the students Australia attracts today will become its skilled workers of tomorrow, helping to fill gaps created by a mining and commodities boom that has driven the national average unemployment rate down to 5 per cent.

Andris Simsons, 26, is one international student feeling the pinch.

Two years ago, when the native of Toronto was accepted into a masters program at the University of Sydney, the Australian dollar was trading at about US70 cents. Since then it has surged 43 per cent, forcing him to find $US4000 ($3958) more each semester to pay his fees.

“I would still have come for the experience but I would have certainly had to work an extra year or more to afford it,” said Mr Simsons.

The number of overseas students around the world has been growing for a decade, reaching an 8 per cent annual pace over the past three years, according to the Institute for International Education. Australia's growth has been robust until 2010, when the Department of Immigration reported a 16 per cent drop in the number of student visas issued.

A worst-case forecast calculated by Curtin University in Perth, assuming a stronger Australian dollar and a continued increase in competition, is a 35 per cent drop in foreign-student numbers in universities this year, with only a modest recovery to follow.

The vice-chancellors of the country's eight top universities are lobbying the government for action.

The University of Western Australia's Alan Robson, chairman of the group, said the currency was making it harder for the country's institutions to compete.

“Australian universities need to expand even in the face of a rising dollar,” Mr Robson said. “Education is the key to developing our connection with the rest of the world and getting skilled workers to keep us growing.”

Leading economists worry that a big drop in foreign students will widen an already gaping hole in the country's workforce for qualified doctors and engineers. They forecast the number of immigrants will be down by as much as 110,000 this year, just as the country needs to attract a growing stream of skilled migrants to help fill gaps in its work force.

A drop in student numbers could also hit the government's tax-take and consumer spending, just when the economy faces headwinds from flooding that has washed over vast areas of Queensland, a region that accounts for on fifth of the economy.

Even with the stronger Australian dollar, leading institutions in the country still maintain a cost advantage over their US counterparts. Two high-quality universities here, the University of Western Australia and University of Melbourne, charge about $US30,000 a year for international undergraduates, for example, compared with about $US40,000 a year for the University of Notre Dame in Indiana.

The government is taking some steps to combat the problem. It has started streamlining its student-visa process to cuts costs; a standard application costs about $US500. It recently commissioned a broader review of the student-visa program, due to be released by the middle of the year, aimed at getting more people from overseas trained in the skills it needs, while fending off competition from the US, New Zealand and Canada for international students.

But with the Australian dollar trading at about parity with the US greenback and 73c against the euro, university treasurers are nervous ahead of this year's enrolment. The academic year starts late this month, or early March, and ends in November.

For US students like Zachary Webber, a recent graduate of Pennsylvania State University who finished his degree by studying in Sydney, the higher cost of living in Australia has hit their pockets hard.

Mr Webber said, “It was the high inflation that really killed me.”

Source: The Australian


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