The Australian economy stands to lose $37.8 billion over the next decade due to the fall in international students, according to a report from Deloitte.
According to statistics released by the Commonwealth Department of Education, Employment and Workplace Relations, there was a 10.9% decrease in international student numbers in January 2011 compared to the same time last year.
Universities Australia commissioned the report providing an assessment of the impact of the downturn in international student numbers, which analysed the total expenditure of international students in Australia.
The report found that Australia will not only suffer a $37.8 billion reduction in GDP over the 2010-2020 modelling period but also a fall in employment because of a lower number of higher education enrolments.
CEO of Universities Australia, Dr Glenn Withers, said: "These figures show a seriously negative effect in the short and medium term that would be a source of major public controversy in most sectors or industries.
"Fortunately the report suggests that the appetite for international education is likely to gradually return and grow in the medium term, though international competition has increased and has benefitted from the adverse impact of some Australian policy settings, including at the State and Territory level.
"Some of these latter continue, as with absence of travel concessions in NSW and Victoria for international students, despite their substantial tax contributions while here," he added.
According to Deloitte, recent Commonwealth policy changes to student visa regulations and to the General Skilled Migration program were the most important contributing factors to the fall in international student numbers.
Dr Withers said: "Importantly however, while the high Australian dollar is considered a further source of pressure, Deloitte believe that this has not been the principal source of downturn, which is an encouraging finding in terms of the prospect for recovery."
The report also notes that Australia's reputation as a safe destination for travel and study has been damaged as a consequence of some relatively recent high profile student safety issues and the overseas reporting of these.
Figures released from Australian Education International (AEI) show income generated from education related travel services for India slumped 15% between 2009 and 2010.