The Stats Guy: I dreamed I was running a uni. Here’s what I changed
The four fundamental changes that would set Australian universities up for the challenges ahead and the needs of society, according to Simon Kuestenmacher.
I had a strange dream the other night. I woke up as the chancellor of a large Australian university.
Tens of thousands of students. Billions in revenue. A sprawling campus and an even more sprawling set of problems.
So I did what any demographer would do. I went straight to the numbers.
Australian universities are no longer just places of learning, they are complex financial machines. At many large institutions, more than half of all revenue is tied to students. And within that, international students often provide the single biggest marginal dollar.
My first decision as chancellor was a drastic one. I capped international student numbers. Not at a fixed number but at a ratio.
No more than a third of total enrolments can be international students. My campus remains very international in nature. The goal isn’t to get rid of international students but to increase the amount of inter-cultural learning.
Another goal is to remove the financial dependency on international student fees that my university has quietly fallen into.
My chief financial officer nearly had a heart attack.
“Are you insane?” he asked. “Half our students are international. They pay $50,000 to $70,000 a year. You’re blowing up the entire budget.”
He wasn’t wrong. A university that relies too heavily on one revenue stream will inevitably shape itself around that revenue stream.
If your financial survival depends on keeping students enrolled, you start optimising for retention. And retention is much easier when learning feels smooth, supported, and – dare I say – gamified.
Less is more
Which brings me to the second problem I noticed in my dream.
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Australia now sends about 55 per cent of school leavers to university. That’s a reflection of the changing nature of work – our national economy is transitioning into a knowledge economy and just needs more university-trained worker bees. But it changes the nature of the institution.
Universities used to educate a small, highly selected group of students. Today they educate the majority.
“University students were smarter in the past”, seems an obviously a true statement.
In 1950, only about 5 per cent of Australians went to university – that means the cohort of university students was made up of the intellectual elite of the country.
Today, universities are mass education providers, educating the majority of the population – the average university student now is obviously less smart now than in 1950.
As a consequence, learning has been simplified. The bigger the share of people at university, the simpler and more uniform teaching methods and institutional standards have become.
More scaffolding, shorter readings, smaller assessment tasks, layers of digital tools designed to keep students engaged. In other words, education has been gamified.
I understand why this happened. Engagement, completion rates, and student satisfaction all matter. But in my dream I had the luxury of asking a more uncomfortable question: Have we optimised the system for the wrong outcome?
So I made my second big reform. I scaled back online lectures.
My university went back to being a physical place. Lectures are still recorded, but the core experience (tutorials, seminars, discussions, presentations) must be in person, on campus.
Lectures must be attended in person or you fail the class (sure, you get to miss one or two per semester, but if you miss more, you fail the class).
Why I am I so radical about this in my university? Because the world of work is changing fast.
Manual work has been automated for decades. Now cognitive work is being automated too. AI can already write decent reports, summarise research, and generate passable analysis. This leaves knowledge workers with tasks like creativity, judgment, ethics, communication, and collaboration.
These tasks are best taught in person and not via a screen. Employers will expect uni grads to have such skills. Oral assessments make a comeback and every subject must feature at least one assessment that can’t possibly be outsourced to AI – what this looks like differs from course to course.
As the boss of my university, I must also protect the pay premium that graduates came to expect. For decades, employers were willing pay higher wages to university graduates because they were seen as intellectually more capable workers. A university degree bought you higher career earnings.
Employers are already starting to question the validity of university degrees and the pay premium erodes.
My university stays relevant in the age of AI by doubling down on the human experience of learning: Smaller tutorials, more discussions and debates, more guided group work, more presentations, more discomfort – because real learning is uncomfortable.
Employers of the future will be guided by university rankings that take into account quality and type of teaching. My university is ready for these new types of assessments.
Make it harder
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And that leads to my third reform – I made university intellectually harder. English language requirements are currently an embarrassment. Too many lecturers and tutors have told me stories of international students who are barely able to hold a conversation in English. That’s not good enough.
Here comes this annoying CFO again: “Making degrees harder, being tougher in English language assessments might lift the intellectual capacity of the student body but it robs me of my biggest source of income: Student fees!”
I let him finish his argument and let his heart rate calm down. Then I show him a different set of numbers.
Half our revenue came from one source (fees) – mostly from a handful of countries. That’s not a strength, that’s a risk.
Any business student would recognise it instantly (once we have lifted intellectual standards). More importantly, I tell the CFO, protecting income is the wrong focus.
The real product of a university isn’t the final degree, it’s the trust that the degree represents intellectual skills.
Employers must trust that our graduates can think, communicate and solve problems. That trust is what creates the graduate pay premium and that’s what allows us to charge fees in the first place.
If that trust erodes because employers think students write AI essays that are graded by AI that our teaching staff uses, the business model collapses anyway. For a university to run in an AI world, quality of education is the only way forward.
The US experience
My fourth reform is inspired by the US college experience. As chancellor, I push hard for a majority of students to live on campus.
The current residential college setup is fantastic, but too expensive to operate at scale (less than 5 per cent of students tend to find room in residential colleges).
For years, universities have treated accommodation as a side issue. I treated it as core infrastructure. Not elite residential colleges for a small minority, but large-scale, purpose-built student housing integrated into campus life.
My goal is simple – the majority of students should live on or immediately next to campus. The benefits are obvious. Students mix far more, friendships form faster. And international and domestic students actually interact rather than living parallel lives (currently most purpose-built student accommodation is occupied almost exclusively by international students).
This creates an academic environment that doesn’t switch off at 4pm. Commutes shrink (which cities should enjoy), attendance improves (which links to my other reform) and informal learning explodes.
You also solve a political headache. Students are no longer competing with non-students in the private rental market and universities can no longer be blamed for pushing up rents.
Done at scale, student housing becomes a stable source of income for the university itself – surely my grumpy CFO would like that.
It also improves student wellbeing (through lower rates of loneliness), reduces isolation, strengthens campus identity and, let’s be honest, dramatically improves the social life of students.
Universities used to be places where young people lived, learned and grew up together. We somehow forgot that. I brought it back.
There are, of course, further reforms to be pushed at my university, but as luck has it, I woke up conveniently within the word limit of this column.
There is a clear lesson in my dream. Universities often behave as if they are trapped by forces beyond their control.
In reality, many of the most important decisions are made inside university walls.
In a world where knowledge is cheap, the institutions that survive will not be those that deliver content most efficiently. They will be the ones that still teach people how to think.
Simon Kuestenmacher is a co-founder of The Demographics Group. His columns, media commentary and public speaking focus on current socio-demographic trends and how these impact Australia. His podcast, Demographics Decoded, explores the world through the demographic lens. Follow Simon on Twitter (X), Facebook, or LinkedIn.
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