International student enrollment is becoming an important part of tuition revenue management in many universities. The revenue side is obviously only one part of the equation and it matters how much it will cost the admissions department to recruit the international student cohort. In the United States, we have seen very little publicly available data to benchmark international recruitment costs. So we trekked to Australian to see if our colleagues there could give us a little bit of guidance on benchmarking our expenses to recruit internationally.
We reviewed the excellent work by Alan Olson, Director of SPRE who presented this year's Benchmarking Australian University International Operations 2012 in early October. The summary paper contains additional benchmarking information on Australian outbound student movement and many more details than we can cover.The report provides information on a broad range of factors from 37 participating universities with more than 85,000 commencing international students, a large population that makes the study compelling for the Australian sector. Please keep this number in perspective since Australia has only about 40 universities compared to about 4,000 universities and community colleges in the US.
So let's focus on our sample and share what is most relevant to you. As we analyzed the data, we considered how IIE's Open Doors reporting would be thrilled to have this kind of sample response for their work. To our knowledge we do not have a similar benchmarking report in the United States for international student enrollment.
Chart 1 (below) highlights the cost if international student offices as a percentage of revenue. Not surprisingly, as the scale of international enrollment and hence tuition revenue increases, the cost percentage of the program and international office decreases. As in any business operation, once you have your team and process in place, the relative cost of adding each new customer (international student) is relatively low.
According to the authors, the aggregate cost of recruiting a student, including commissions and devolved costs, was 10.2% but, among the 37 universities sampled, the average was 14.1% and the median was 12.5%. We have to keep in mind that Australian universities do not have the mix of small, medium and large size universities that we find in the United States. With few exceptions, Australian universities typically have more than 20,000 students. Here is a list with the number domestic and international students at Australian universities from a different source than the Alan Olson report.
Chart 2 (below) is a very interesting comparison for your own operation. What does recruitment of an international student cost per enrollment? The average cost was about $4,600. You notice that the cost includes commission payments, which is highly relevant in Australia since according to this analysis of 33 universities, more than 63%, or 51,000 students, were recruited with support from commission-based agents. We are thinking the NACAC commission would have come to a much faster conclusion about the agent debate if United States universities had similar metrics.
Lastly, chart 3 (below) shows the correlation of cost per student by country and the number of students recruited from each country. Not surprisingly again, China accounts for the largest share of international students and also the lowest recruiting costs. The next group from India is already considerably smaller and results in higher costs.
We are impressed by the voluntary transparency of Australian universities which helps university administrators benchmark their own international enrollment operations and identify areas for improvements. In general, international student enrollment plays a much more prominent role in Australia. International students account for almost 25% of enrollment with some universities reaching 35-45%. In our travels around Australia these past two weeks discussing international student recruitment with a wide range of administrators here, we have found the Australian education providers highly professional and experienced.
Most United States institutions could learn from the Australian experience. The Alan Olson report is a great place to gain some perspective as you analyze your international enrollment operations and budget.
Chart 1
Source: SPRE, October 2013
Chart 2
Source: SPRE, October 2013
Chart 3
Source: SPRE, October 2013
