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Despite charging more than $50,000 for some degrees, the state’s universities are operating at an average loss of $12,000 for each domestic student.
Universities across NSW made $3.2 billion from local students last year, an increase of $234 million from 2024 thanks to an extra 11,000 domestic enrolments, the auditor-general found in a report tabled to parliament on Thursday.
IT and engineering recorded the biggest leap in enrolments, growing 9.6 per cent compared with the year before. Overall, the state’s universities had received a 31.8 per cent increase in revenue since 2019.
But the NSW auditor-general Bola Oyetunji warned the increase in revenue from domestic students was not enough to keep the lights on.
“In 2025 the average operating cost per [full-time] student across all universities was $37,868. When compared to the average revenue per domestic student of $25,213, universities would operate at a net loss per student. Average [Commonwealth contribution] per student of $10,550 has not kept pace with the increase in operating costs,” Oyetunji concluded.
The report made six recommendations, ranging from developing AI policies to managing conflicts of interest better. It also found that universities spent $139 million on consultants, many of them directly sourced and not contracted via tender.
Labor MP Sarah Kaine, who chairs an ongoing parliamentary inquiry into the state’s universities, said the $3.2 billion in revenue posed the question of whether universities’ management was up to scratch.
“You have to wonder – these are extremely highly paid executives, not just the VCs but their cadre of executives paid more than the premier, and they still have to contract $139 million of management consultancy,” she said.
“They’re not only bad at financial management but really bad at people management.”
The average shortfall for domestic students highlights universities’ heavy reliance on international students. This reliance is becoming increasingly risky as debate around migration has moved the government towards further constraints on the $54 billion international student industry.
The Albanese government is slowing student visas through so-called soft caps, reducing visa processing once a university has reached 75 per cent of its government allocation of international students, along with rejecting 32.5 per cent of applications from Indian, Nepalese and Bangladeshi students.
Universities in NSW are likely to feel the brunt of this: they received $4.7 billion in course fees paid last year, up 13.6 per cent since 2024. Last month the Herald reported that the University of NSW and the University of Sydney each made $1.7 billion in revenue from international students.
Federal opposition education spokesman Julian Leeser said that overreliance on international students is “clearly problematic” for the sector.
“It should not be controversial to say that publicly funded universities should serve Australian students first,” he said.
There is also a significant concentration of international students – more than 44 per cent of fees and charges revenue came from students from China, India and Vietnam.
At the University of NSW, 78 per cent of international student revenue is from China; at its main competitor, the University of Sydney, it is 77 per cent.
“NSW universities continue to face concentration risk in overseas student revenue due to the high level of reliance on overseas students from a few key countries of origin,” the report said.
Leeser said: “Any excessive concentration of international students is a clear risk – not just financially but also in terms of student experience. We want all students, whether domestic or international, to receive a world-class education and first-rate experience on campus.”
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