Australian universities are facing a funding crisis that could throw Julia Gillard's education revolution into turmoil.
The sector is facing further college closures as enrollments for the next two intakes from China have fallen by up to 40 percent and the demand from nine out of ten of the biggest markets is waning.
Forward enrollments from China for next month's summer intake are down by 30 to 40 percent for universities and up to 80 percent down for TAFE colleges.
China provides 27 percent of Australia's 545,000 foreign students. Australia's Skilled Migration List - which was cut by more than 50 per cent in May - has been the reason for the decline.
"At least 60 percent of students and their parents ask about the possibility of immigration before they make a decision," Wang Wei, general manager of agent Cross World International Centre, said. "After they go abroad, maybe 95 percent would think about immigration."
She added, "Before 2006, Australia topped the destination countries for China's abroad students. Now the rank is US, Britain, Australia and Canada, among the Western destination countries. "