English language schools face wipeout from international student crash

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Last week it was first reported that Australia’s $2.4 billion a year English language schools are facing collapse amid the travel bans and collapse in international student numbers:

Ian Pratt, the managing director of Lexis English, which has six centres in Australia and employs 330 people, said his business had suffered “massive cancellations”…. he said the private part of the ­English tuition sector was facing extinction in a matter of weeks.

“Industry-wide, I’m hearing people saying two weeks, I’m hearing people say six weeks,” he said…

The industry faced the prospect of having no English schools left by the end of the year, “if not mid-year”.

The situation appears to have worsened, with English language schools reportedly facing imminent “extinction”:

David Scott, managing director of the English Language Company in Sydney has 280 overseas students working from home online and whose visas will expire within six months.

“Our business is about people coming into the country so, with the borders closed, there is no ongoing revenue for six months,” he said. “We still have the expense of paying teachers and staff to manage these students…

I think a lot of schools will face extinction very quickly unless something is done,” he said.

Phil Honeywood, chief executive of the International Education Association of Australia, described the sector as the “canary in the coal mine” for the $40 billion international education industry because it was an entry point into tertiary institutions…

Brett Blacker, chief executive officer of English Australia, the peak national group representing about 120 businesses, said some had already closed and others were on the brink of collapse because their revenue depended on a constant flow of international student arrivals.

“We rely 100 per cent on foreign nationals and, since borders closed on March 20, no new business can come in,” he said.

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While the collapse of English language schools would be painful for those involved, it could be beneficial for higher education more generally.

International student numbers reach absurd levels last year of of nearly one million enrollments, almost double 2012 levels:

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This absurd growth saw overall education standards tumble, as widely reported on ABC’s Four Corners and elsewhere.

If COVID-19 is the pin that bursts Australia’s international student bubble, and returns enrolments back to sustainable levels, then so be it.

About the author
Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness. Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.