Economic Aspects of the Foreign Student Question*

Foreign students comprise about 4 per cent of total student enrolments at Australian universities and colleges. The numbers of private overseas students in Australia are regulated by quota and by the imposition of a subsidized fee. Australian government policy towards overseas students has been discussed in two recent government reports which reach conflicting conclusions about desirable policy changes. This paper puts forward the arguments against which the economic aspects of these two reports can be judged, discussing the theoretical basis for regulation by fees and quotas and applying these considerations in the present A ustralian context. It is found that, despite some recent moves in the right direction, Australian policy towards foreign students and towards the use of tertiary education as a medium of foreign aid, is still short of ideal when judged on economic grounds.