Australian higher education institutions increased their income from overseas students by almost A$1 billion (?624 million) last year, according to information from the country's Bureau of Statistics quoted in The Australian news-paper. Despite this, the overall amount of money earned by the country from such students fell by A$2.2 billion.

This suggests that universities are maintaining fee income despite a much-publicised drop in student numbers in the past two years - while other sectors, such as retail, are suffering.

One explanation being put forward is that universities across the country are increasing their overseas fees, which is helping to cushion the blow of a crisis in demand prompted in part by government visa rules that have now been relaxed.

But Simon Marginson, professor of higher education at the University of Melbourne, said that international fees were always on the rise to aid universities losing income from domestic students.

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"The universities need to increase unit revenues from international students because they need the funding rate supplied...to compensate for the fact that the majority of domestic places are funded below real cost," he said.

He added that the federal government had just introduced an expansion of the domestic system, therefore increasing the overall loss to universities of supporting Australian students.

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Although question marks remain over whether continuing fee hikes will have their own deterrent effect on students travelling to Australia from key markets such as China and India, Professor Marginson was sanguine that this will not be the case.

"There is no evidence that [international student] movements are due to marginal price changes," he said. "Student numbers are governed by supply - visas granted and [applicants] accepted - and on the demand side primarily by large-scale influences, such as where the education agents in China advise students to go."

simon.baker@tsleducation.com.