The proposed amendments to Australia’s ESOS Bill have elicited a strong response from diverse voices within the higher education sector over the past six months.
This discourse has been dominated by perspectives of the “winners and losers” across the public universities – where proposed caps maintain 2023 volumes of around 145,000 new international enrolments but seek to re-allocate these across the 38 university providers. While some of these universities may encounter funding challenges with fewer international students, none are likely to have questions of continued solvency.
This is not the case in a related category – the “non-university higher education providers”, more commonly referenced as the NUHEPs – where, for many, the impacts of proposed ESOS amendments will fundamentally challenge their operating models and undermine ongoing viability.
What’s a NUHEP and how many are there?
There are currently 159 Australian providers classified as NUHEPs – a small increase of 155 from 2023, but up from 137 in 2011. Government-funded TAFEs that offer degrees are generally included in this definition but this subset has been excluded from further analysis or comment given that proposed enrolment limits for these TAFE providers have been explicitly protected with no reduction against 2023 levels under the apparent doctrine of “public is good, private is bad”.
Within this segment of NUHEP providers, there is a mix of not-for-profit and for-profit operators. Forty-one are registered charities while 20 focus exclusively on health-related subjects and 13 on creative arts. Some 17 are pathway providers embedded within our public university campuses (including two wholly owned by our top-ranked universities), offering bridging courses to international and domestic students.
The political rhetoric and varied methodologies employed in calculating caps explicitly prioritise public universities and TAFEs at the expense of these NUHEP providers
There are several long-established NUHEP providers that are familiar names – including various home-grown Australian “fair go” success stories such as Holmes Institute, JMC Academy and a number of Navitas colleges. Eight other providers have been newly registered since COVID while 22 are long established but recruit fewer than 10 international students per year, their focus being domestic students.
The political rhetoric and varied methodologies employed in calculating caps explicitly prioritise public universities and TAFEs at the expense of these NUHEP providers. One possible implication is that this is part of the activity to weed out the “shonks and crooks” to which the minister of education has often referred.
A pioneering model
NUHEPs have established and nurtured new markets and models for Australian education, pioneering the pathways and trimester models of delivery that were commonplace among this category a decade before wider adoption by the universities. Diversification from Australia’s broader reliance on Asian nations has been spear-headed by the NUHEPs.
Many are long-established, notably Holmes Institute (2004) and the Australian College of Applied Professions (2001). These institutions pre-date the creation of the world-leading ESOS Act. It is unsurprising that the submissions to the proposed ESOS amendments from NUHEPs broadly supported the genuine quality and integrity measures.
In 2023, only five NUHEPs recruited greater than 1,000 international students, while 50 providers recruited between fewer than 99. NUHEPs are, predominantly, small institutions focussing on skills in demand including health, aged care and cybersecurity – areas identified as experiencing chronic skills shortages and where providers have been explicitly encouraged by various government strategy papers to develop capabilities.
The Quality in Learning and Teaching (QILT) Student Experience Surveys consistently place the group of NUHEPs substantially ahead of the public universities – 2.9% ahead (78.6% vs 75.7%) in the latest 2022 report. The top-performing institution for education experience in every QILT Student Experience Survey to date has been a NUHEP.
Despite a discriminatory systemic disincentive for domestic students to choose an independent provider – an inexplicable surcharge of 20% to each student on their FEE-HELP loan amount – many domestic students already choose to study with independent NUHEPs in impressive numbers. Of the total NUHEP student load in 2022, 57% were international students and 43% Australian. Australia’s much-heralded Universities Accord, which aims to increase the percentage of working-age Australians with a tertiary qualification to 80% by 2050, can only be achieved by a substantial contribution from the independent NUHEP providers.
New barriers to entry
With equivalent oversight via TEQSA to our public universities, the barriers to entry for new providers and ongoing requirements for quality assurance are appropriately onerous. TEQSA itself predicts a minimum period of 36 months’ development prior to achieving accreditation, and recent examples have estimated investment to this stage (prior to any revenue through a student commencing) to be in well in excess of AUSD$3 million.
The proposed legislation introduces further barriers to entry for prospective new providers – effectively a complete moat – given the proposed catch-22 requirement to offering courses solely to domestic students (and specifically students without recourse to FEE-HELP loan funding) for a period of two years prior to a license to recruit international students.
NUHEPs have invested – and continue to invest – in their operations through a long-term commitment to higher education in Australia. John De Margheriti’s newly established AIE Institute builds upon success at the established Academy of Interactive Entertainment. Six years of work and AUSD$6m of investment has supported the establishment of this innovative institute, which has been rewarded with a 2025 allocation of zero students.
Punishing caps for NUHEPs
Independent NUHEP providers (again excluding TAFEs) enrolled a total of nearly 35,000 new international students in 2023. Meanwhile, the proposed caps for 2025 are 25,380, representing a forced reduction of 27%. Despite predictable fanfare given the ostensible focus in the minister’s various press releases and subsequent explanatory memorandum on “quality and integrity” and contribution to the housing crisis in our major cities.
The crude approach of applying for the majority of NUHEP providers a simplistic 31.5% discount factor against 2023 new enrolments to determine indicative 2025 caps is discriminatory
There has been zero consideration of provider size, location, availability of student accommodation, alignment of courses to skills shortages or quality of provision in the allocation of caps. While there have been assurances that factors will be considered in future cap methodologies for 2026 and beyond, it is evident that some quality NUHEPs will no longer be operational by that stage.
The crude approach of applying for the majority of NUHEP providers a simplistic 31.5% discount factor against 2023 new enrolments to determine indicative 2025 caps is discriminatory, short-sighted and will rapidly and directly lead to a reduction in student diversity, an inferior student experience with fewer electives and in several cases, campus and provider closures.
It is instructive that the same Department of Education chose a more nuanced and sophisticated formula for public universities. Considering both 2019 and 2023 enrolments and applying growth factors for those with a relatively small volume of international students. No such consideration has been given to independent NUHEPs. The entire category is being equally penalised.
There has been concern in expert commentary and from NUHEPs themselves of inappropriate “poaching” of onshore students post-COVID. There is well-founded concern that this activity, together with subjective offshore visa refusals, reduced the baseline 2023 student volumes for quality NUHEPs. There has been no consideration given in the allocation of caps to student source or quality.
This means quality providers have been penalised repeatedly for following strict adherence to stringent recruitment practices post-COVID. There is now the perverse likelihood that providers across the broader sector that engaged in inappropriate practices in 2023 have been rewarded with the largest allocation of caps for 2025.
A run on the TPS?
The direct consequence of this legislation, if passed, will be the largest run on the Tuition Protection Service (TPS) yet seen – and as independent consultant and principal of Field & Associates Claire Field has said, there is likely insufficient funding in the system for even a conservative estimate of the required amounts. This outcome can still be avoided in the NUHEP category through the relatively minor reallocation of 2025 caps to ensure that providers have the potential to remain solvent whilst they diversify income streams.
Whilst international student caps are bad policy, there is bipartisan support and so most pragmatic efforts are now focussed on making them – as professor in the practice of higher education policy Andrew Norton notes – “less bad”. Field has identified “anomalies” in the broader allocation of 2025 caps, including caps for providers whose licenses have been suspended on quality and integrity grounds and other caps allocated for courses that are not registered for international students.
All this while a number of quality NUHEPs are potentially forced to significant downsizing or worse through a robocap allocation of 10, 20 or 50 new students.
Alternatives to the flawed methodology
Some desk-based remodelling of the Department’s own data suggests an additional allocation of as little as 2,000 for the NUHEP providers in 2025 could drive targeted interventions above the formulaic outcome – allowing, for example, a minimum allocation of the lower of approved CRICOS capacity – or 150 students for new and small/niche NUHEPs. This approach would likely provide a route to survival for these innovative providers as they diversify income streams and ensure their valuable contribution to Australia’s higher education system is able to continue.
There is now the perverse likelihood that providers across the broader sector that engaged in inappropriate practices in 2023 have been rewarded with the largest allocation of caps for 2025
If this legislation is passed without such considerations, the foreseeable outcome is wanton damage to many quality providers, their students and staff – the direct repercussions of adopting a simplistic spreadsheet formula rather than engaging in constructive dialogue with the sector and considering the nuances of individual NUHEPs.
Meanwhile, these innovative providers await Senate debate of the ESOS legislation later in November with hope but little expectation.
Watch The PIE’s webinar on everything you need to know about the ESOS Act on replay here.