With governments in Australia, Canada, and the UK prioritising increased agent regulation within international education, we must ask how we arrived at this point.
There is still, for me, an open question as to whether we would be better off with regulation or a demand for total transparency from all universities and agents regarding their relationships.
But before I get to that, it makes sense to look at the roots of the issue. In all three of these anglophone study destinations, universities are predominantly government-funded. However, governments are increasingly reluctant to fund their higher education sectors at the required levels to teach students and undertake research. This funding gap, exacerbated in some cases by domestic tuition fee freezes, inflation, and the cost-of-living crisis, is growing each year.
The international trend
To bridge the widening gap between government funding and their actual financial needs, universities have largely turned to increasing untied and untaxed revenues from international student tuition fees. This strategy has been both lucrative and, until now, a successful way to fill the gap. However, its desirability and sustainability are questionable, especially as governments scrutinise the motivations of international students from the Global South, questioning whether their primary goal is migration rather than education.
This year in particular – as many countries go to the polls – immigration has raised its head as an issue and international students are well and truly in the firing line, as politicians keen to keep their seats seize on the anti-immigration agenda as a potential vote winner.
The need for funds and consequent desperation to recruit more international students have created a lucrative business for middlemen in major source countries known as agents, facilitating overseas study.
The role of the agent
Typically, the agent will work with the student and his or her family to recommend institutions of study and assist with the visa requirements for the chosen study destination. Following the pandemic as more students exercise choice when considering multiple study destinations, many agents do play a crucial role in facilitating overseas study. In addition, having “boots on the ground” lessens the need for university staff to travel overseas thus saving on international office costs and lowering an institution’s carbon footprint.
The use of agents, in short, reduces the burden on universities by passing recruitment responsibilities to contracted external actors, who benefit financially through individual commission payments which can vary as much as between 5 and 30 per cent of the first year’s tuition fee, for each student recruited, along with additional marketing and recruitment fees.
During the last decade the agent market has ballooned, with federal government data showing that over 75 per cent of Australian international students and an estimated 60 per cent of UK international students coming through agent referrals. When it comes to the UK there is no data to reveal an accurate picture of the numbers of students recruited through agents despite a number of voluntary schemes in place.
This situation results in hefty commission payments from universities to overseas actors, amounting to millions of pounds, with little oversight or transparency. Agents benefit from the lack of transparency regarding commission fees, making it difficult to identify which agencies are effective and ethical. There is also no way to distinguish agencies providing diligent, fee paying students from those whose recruits may disappear from the university roster during their first term.
Agencies for agents
The lack of clarity has been further exacerbated during the pandemic due to a rise in the so called “edtech aggregators,” who pool agent relationships to make life easy for universities having a single touch point to deal with multiple agency relationships, however the actual impact has been an unprecedented rise in student applications to process and increasing numbers of rejected applications and disappointed students.
The proliferation of agent aggregators (once the darling of venture capital investment) with eye watering valuations has muddied the water further, with many agents subcontracting to so called “sub-agents” to recruit the students and then funnelling them through their more established channels.
An even more concerning issue is that the majority of universities recruiting significant numbers of international students have no clear understanding of their actual cost of acquisition. International recruitment costs generally include a senior executive post, such as a PVC global, and international office operations (staff, marketing, admissions, administration, travel, and so on) but for the most part in the majority of Australian and UK universities predominantly, agent commissions. Without total transparency particularly when it comes to agency commission, no university knows the cost of recruiting a student from Brazil versus China, or the comparative costs for recruiting students to different faculties, at different levels and on specific courses.
Most senior university leaders likely prefer to know their exact international student recruitment costs and how these compare to peer institutions. They would also benefit from understanding which agencies are most effective in recruiting quality students.
Universities and agents
From the agent’s point of view, the most reputable agents want to work with the best universities, so if they are referring students to institutions with higher than average dropout rates, this too is a red flag in terms of them referring future students to specific institutions with the lowest completion rates.
In addition, from the student perspective no international student is in fact aware if they are engaging with a ‘good’ or ‘bad’ agent, as they have no idea of student’s degree completion rates for each agency, plus if the agent concerned has a financial motivation for recommending one university over another due to a higher rate of commission. In truth all parties are in the dark.
Regulation or transparency
The issue with regulation is that it would probably sit under the Office for Students, and we all know how well that usually turns out! Plus, anything that says regulation screams government and red tape, not the best course of action if you are looking to reassure the public and inform prospective international students. We have long felt that regulation would add further cost and administrative burden to universities, which in fact have access to agent contracts, finance data, student number and completion rates at their fingertips. So why regulate when compelling transparency is in fact the best course of action?
Agent training and voluntary frameworks such as the Agent Quality Framework in the UK are merely temporary fixes. A sticking plaster if you like covering, as opposed to exposing any bad practice. What is needed is comprehensive transparency, exposing all agency relationships, commission payments, and student success rates. This ensures international education fulfils its promise to students.
What data should universities be required to disclose? In our view, nothing less than total transparency is sufficient. When it comes to data, the fact that most agents require commission payments per student, and this runs through the university finance systems this data will be available. In the first instance universities should make all agent and aggregator contracts publicly available, detailing numbers of students recruited by country, fees paid, and course completion rates.
In truth this whole industry has been in the shadows for too long. While the majority of agents are reputable actors, as in any field of business there are examples of bad practice. Transparent, annually reported data should be accessible from all institutions and agencies, allowing universities to understand their true cost of international student acquisition, agents to evaluate the best universities with which to work and prospective international students to identify agents and higher education institutions, who have their best interests at heart.
Would mandatory disclosure of agent commission rates be compliant with CMA laws?
Oh Louise, this is far too idealistic a notion, pipedream if you will. UK HEIs have ample opportunity to publicly disclose figures and remain transparent. However, in a world where education is a commodity and the bottom line of a University rests on international student enrolments, voluntarily giving away part of your “secret recipe of herbs and spices” is ceding any competitive advantage one has. Regulation, and enforcement of disclosure, is the only way this will get off the ground. We have spent far too long with the ‘please, for the greater good’ narrative, now it’s time to make it happen and enable the sector to credibly protect itself from future, potentially harmful, intervention – even if it doesn’t yet see it that way itself.