A New Year's resolution for higher education

A New Year’s Resolution for Higher Education

One New Year’s resolution is usually enough, and often it doesn’t even make it through January. But if there’s one resolution universities should commit to this year, it would be “to live within their means”. Although it would have been ideal for Santa Clause to secure adequate, sustainable government funding for higher education, that feat was beyond even his powers.

In the UK, universities employ over half a million staff and educate 2.8 million students, while in Australia, they employ 130,000 staff and educate 1.5 million students. Even during the pandemic, Australian universities made a record $5.3 billion surplus. The University of Sydney recorded the highest revenue of $3.5 billion in 2021 with a $1 billion surplus and an operating margin up by almost 30%. International student fees accounted for the bulk of its total revenue, outpacing government funding.

The reality is that governments are unlikely to increase funding for higher education, with growing demands on the public purse for job creation, K12 education and health/social care. Funding will undoubtedly decrease over time, making financial autonomy essential for universities. Although this situation isn’t ideal, it’s achievable—but only if universities aren’t restricted by international student caps.

These restrictions on international student recruitment come at a time when young people and society—particularly in the global north—are increasingly questioning the value of higher education. In the UK, taxpayer concerns are mounting as rising interest rates are projected to increase student loan costs by £11 billion annually.

In Australia, growing student debt and a strong job market have driven a 13% drop in bachelor’s degree enrolment since 2016, casting doubt on the government’s target for 55%-degree attainment by 2050. Similarly, in the U.S., confidence in four-year degrees is at a record low, with only 22% of adults considering a degree worth the debt. This shift is pushing students toward alternative career paths.

Employers in developed economies are increasingly moving away from requiring degrees, placing greater emphasis on skills-based hiring. In the UK, the Prime Minister has pledged to refocus apprenticeship funding on younger people by shortening programs and limiting funds for advanced university-level qualifications. President elect Donald Trump has described universities as “bastions of liberal extremism”. If domestic enrolment continues to decline, universities will face significant financial challenges.

For many institutions, international student fees are the main source of revenue outside of domestic tuition. Capping international student numbers—when fewer young people are opting for university and when governments are prioritizing spending in other areas—creates a perfect storm. This could push colleges and universities to the brink.

While university leadership salaries may draw criticism, these leaders are certainly earning their keep. They must present a united front to the government to retain the autonomy needed to recruit internationally. Unfortunately, it’s too late for universities in Canada, and the Netherlands, where international student caps have already been implemented despite opposition from the sector. Australia may have dodged this bullet with ESOS now dead in the water, but with an election in 2025 and both major parties keen to prove their anti-immigration credentials to the electorate at large, it is likely future policy changes will have more serious consequences for international education down under. The truth is that advocates for international education lack the data and evidence needed to counter politically driven anti-immigration narratives.

The global higher education sector must now emphasize that universities are not only agents of change but also drivers of global economic growth. Institutions in the global north are essential in reducing inequalities, with most international graduates returning home to successful careers that fuel economic growth and reduce the desire to migrate.

To live within their means and secure government support for internationalisation, universities must demonstrate that international education is largely immigration-neutral. But how can higher education manage this, particularly if governments restrict international recruitment opportunities amid rising global student mobility?

Research from Holon IQ indicates that today, nearly five million students pursue education abroad, with that number projected to reach nine million by 2030. Annual spending is expected to exceed $400 billion, by 2030 with most growth coming from Asia, particularly China and India. A focus on employability and establishing talent pipelines from the global north to the global south will be crucial for universities to regain public trust amid rising anti-immigration sentiment within the domestic population.

The first step is for universities to understand the career outcomes and destinations of international graduates who typically return home either directly after their studies (common among Chinese students) or after a period of post-study work (often the path for Indian and South Asian students). With several countries increasingly restricting permanent residency, like Canada’s recent reduction in PR numbers from 500,000 in 2024 to 395,000 in 2025, this information becomes crucial.

Understanding where their international graduates go and the employers hiring them strengthens a university’s recruitment narrative for prospective international students. It also opens new revenue opportunities through recruitment services for overseas employers, continuing professional development, and funding for applied research. Moreover, this creates a valuable lobbying opportunity to highlight the role of universities in attracting direct investment from alumni working overseas who are interested in global market expansion.

Transnational education (TNE) also offers potential, though it may not be a significant revenue driver. In the UK, a world leader in TNE provision, there are probably fewer than ten universities out of over one hundred deriving significant revenues from TNE at present. Academic partnerships or campus provision in major source markets like China, India, and ASEAN nations provide valuable opportunities to engage with industry directly. Targeting employers who already hire university alumni would allow institutions to create lasting industry relationships, benefitting both current and future students.

For higher education’s New Year’s resolution to endure, the sector must focus on the future, aligning closely with industry both domestically and internationally, and shift its view of government funding from essential to supplementary — a “nice to have” or the “icing on the cake.” Private higher education sectors thrive in many countries without government funding, and they manage to be research-intensive while producing highly employable graduates.

The future of universities lies in their own, I would argue, very capable hands. By focusing on their social role and the significant value they bring through the students they educate and graduate, and evidence the fact that they go on to have successful careers, universities can navigate the challenges ahead and reinforce their social licence.