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University international rankings: Understand ROI

University international rankings: Understand ROI

International students are now the lifeblood of many universities in Australia and international rankings are a vital tool in attracting this market. While most institutions invest heavily in these rankings they’re often unable to link investment levels with strategy and desired outcomes in terms of student attraction. KPMG Australia’s unique International Rankings Return on Investment Model gives the evidence needed to demonstrate ROI and help build the case for future investment.


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International education has become a major contributor to Australia’s economy, with unprecedented numbers of international students enrolling at Australian universities. Education is Australia’s fourth largest export, with the international student market valued at $30.3 billion a year1.

In 2018, there were 693,750 international students in Australia. With 45.5 percent of international students enrolled in higher education institutions, the revenue from international student fees has become an important source of income for Australian universities.

For universities, this revenue forms an important cross-subsidy into funding core research activities, and it is conservatively estimated that one in every five dollars spent on research is cross-subsidised from teaching revenue2.

The importance of international rankings for students

It is no surprise that Australian universities are competing heavily to attract international students to study at their institutions. Universities understand that international university rankings – such as the Quacquarelli Symonds (QS)3 and Times Higher Education (THE)4  World University Rankings – enable them to build, maintain or improve their reputation and profile internationally, and that high-achieving students use rankings to shortlist institutional choices, especially at the postgraduate level5.

In fact, data indicates that:

  • over 80 percent of undergraduate and postgraduate students pay attention to rankings6. The Australian Government’s national survey of International Students indicates 94 percent of international students consider the reputation of the education provider and 92 percent the university’s research quality, as part of the decision-making7
  • in other surveys, ~19 percent of prospective international students indicated university rankings as being the most important factor in choosing a country and city/town in which to study, and 
  • 23 percent indicated the ranking as the most important factor in choosing a university8.

Getting a grip on ranking ROI

As a result, universities have increasingly incorporated rankings results into strategic planning. Most Australian universities now have formal internal mechanisms to regularly review their rankings performance, as well as strategies to improve their ranking. The presence of an institution in the rankings table heightens their reputation and profile9.

A possible reason is that rankings are currently the only available comparative measure for higher education institutions at an international scale10. As a result, institutions use rankings to set targets or benchmark their performance, set strategic goals, define targets/key performance indicators (KPIs), and aid resource allocation11. Rankings are seen to provide the evidence, justification or rationale for making strategic change and investment across a university12.

To date, most Australian universities’ rankings strategies have focused on what we might think of as ‘low hanging fruit’. For example, most universities have streamlined and optimised the way they collect and report data to the rankings agencies.

Similarly, most universities maintain databases of academic colleagues and employers of graduates to submit to QS for the survey metrics. And marketing teams routinely engage such people in the lead up to the rankings to keep the university ‘top of mind’. The benefits of such tactical ‘optimisation’ cap out pretty quickly, and in order to continue to improve, significant strategic investments will be required.

KPMG Australia’s International Rankings Return on Investment Model

To help universities develop their rankings strategy, and to understand the costs and benefits of improved institutional ranking performance, KPMG Australia has developed an International Rankings Return on Investment Model. Our model allows Australian universities to understand how investment in different areas of university operations (e.g. research expenditure, staffing levels, marketing spend) can improve rankings performance and generate international student revenue.

Our model helps universities to understand:

  • which metrics in the rankings a university can improve to have the greatest impact on their overall performance
  • the rate of improvement in score that a university needs to sustain to improve its ranking relative to institutions globally
  • how investment across different areas of university operations is associated with increasing performance and overall ranking performance, and
  • the quantum of additional international student revenue that might be associated with increasing overall ranking performance.

How does it work?

To do this, we have examined the relationship between institutional rankings performance and international student enrolments, trends in international university performance in QS and THE rankings for over 1000 universities, and patterns of university expenditure for all Australian universities over a five year period. Our data driven approach allows universities to have an evidence base to decisions on investment into institutional rankings performance.

To illustrate the tool, we have presented two hypothetical scenarios generated by the model:

  • Scenario 1 is based on a highly ranked Australian university, ranked inside the world’s top 50 universities in QS.
  • Scenario 2 is based on a university ranked around the middle of the Australian pack, somewhere in the 350-300 band in QS.

In each case, we have analysed what impact an additional investment of $50 million and $100 million would make on each university’s rankings performance and student revenue.

Scenario Rank with additional $50m investment Rank with additional $100m investment
Top 50 rank university Just inside top 40 Just outside top 30
350-300 rank university Top 250 Top 150

What does the model tell us?

For the lower ranked institution

  • either investment would have a significant impact on their rankings, with $100 million rocketing them into the world’s top 150 universities. However,
  • the investment has to be considered in the context of their current research expenditure – in all likelihood, $100 million is a large investment relative to their current university budget. 

As might be expected, for the higher ranked university

  • the gains are much smaller for the same investment. Like the previous case, this is partly because of the relative size of the investment compared with the existing operations – $100m is a smaller proportion of the existing university budget and therefore less impactful. But,
  • there is another important factor, which is the competitive circle that the university is competing within, which includes the largest universities in the world, who are also spending on improving their rankings performance. At this end of the global field, significantly improving an institution’s rankings is a very expensive undertaking.

However, not all expenditure is created equally, and spending has to be targeted at improving in areas where the university can improve its rankings, and not at areas where it can’t. For example, for our hypothetical university in the world’s top 50, there are a range of metrics in the QS ranking where the university is already performing almost at the top of what is possible – like academic reputation and employer reputation. Investing more into university marketing, while it may be an important activity, might not therefore represent the best rankings strategy available.

Instead, the areas where there is greatest room for improvement are in Faculty to Student ratios and Citations, so investments should be targeted at activities that will improve these indicators.

This is clear from our modelling: when we look at the $100 million expenditure we see that if the University were to spend this largely on marketing, there would be no lift in the university’s performance. If, on the other hand, it spent this on academic wages, primarily for research-only staff, this could drive improvements of around 10 ranks.

In this way, our modelling has assisted universities to hone in on the areas where rankings strategy and investment overlap.

How much to invest in rankings and for what return?

The key value of rankings performance for universities is how it drives international students’ decision-making of where to study. To help universities make the case for additional investment, our model is also able to provide an indication of the expected boost to international student enrolments that are likely to accompany improved rankings.

Continuing our two cases, the table below shows the additional international students that are associated with different investment scenarios.

Scenario Additional students with additional $50m investment Additional students with additional $100m investment
Top 50 rank university 190-340 470-680
350-300 rank university 180-370 300-640

Interestingly, the return in each case is not substantially different in both investment scenarios. As with the size of the investment, however, this must be understood in relation to the size of the university’s existing student cohort. In the Top 50 University either case will result in a smaller percentage increase in student revenue for the investment, whereas for the mid-ranked university this will be a substantial proportional increase in student numbers.

In terms of the associated revenue, the table below shows the expected revenue in each scenario. The ranges are calculated based on an average fee for postgraduate courses of $28,50013, but will be impacted by higher and lower cost subjects and is dependent on the courses offered at any university.

Scenario Additional revenue with additional $50m investment Additional revenue with additional $100m investment
Top 50 rank university $5.4 - $9.7m $13.4 - $19.4m
350-300 rank university $5.1 - $10.5m $8.6 - $18.2m

The return on investment is not immediate, and a university should expect that it will be several years before the investment is recouped. However, as a general principle, the fact is that there will be a bump in international student fees and this will continue to be realised for several years after the investment. In either case, it would be at least five years before the initial investment is recouped in student fees.

There would be other benefits to improving rankings performance that would also offset the investment, though, such as additional funding under the government’s research block grants scheme, which includes measures of postgraduate research students, increased ability to attract research partners, and increased success in grant funding that follows from additional investment in research.


The cost of improving rankings is inevitably high. For example, in Korea a 38 percent increase in per student expenditure across the period 2005-2012 saw an additional two Korean universities enter the QS top 200, for a total of seven, with the existing five all also increasing their rankings. In China, institutions such as Peking University and Tsinghua University have both benefited from $300 million government investments, improving their rankings into the top 40.

There have been cases of universities that had highly ambitious goals, but then abandoned these plans as the university was becoming more prestigious and selective, which ran against its mission. In other cases, the costs of rankings performance are prohibitively high. For example, the University of Rochester found that in order to move up just two points in their national rankings, it would have cost the University $112 million.

Naturally, the higher up the ranking scale a university is, the harder it becomes to improve14. Given this, deciding the role that rankings play in an overall university strategy is a task for each university to undertake. In general, there are three institutional responses:

  • ignore rankings altogether
  • pursue rankings as an end in themselves
  • use rankings as one amongst many external validation points.

Advocates of each position exist – for example, advocates of ignoring rankings claim that, especially for regional and specialist universities, rankings can get in the way of servicing local communities, stakeholders and governments15. The approach to international rankings is a decision that each university makes for a range of reasons.

If a university does decide to pursue rankings performance,  this must be done strategically, and significant resources will need to be strategically mobilised to succeed. Our modelling provides universities with a set of inputs into such a strategy, including:

  • how different scales of investment may impact rankings performance
  • how investing in different activities which target different indicators will impact rankings performance, and
  • the different scales of return that can be anticipated in terms of international student revenue, and thereby the time scales that may be associated with a return on investment.


  1. Department of Education and Training (2017). Export income to Australia from international education activity in 2017, access at Research Snapshot (PDF 854 KB)
  2. Norton, A. & Cherastidtham, I. (2015). The cash nexus: how teaching funds research in Australian universities, Grattan Institute.
  3. QS World University Rankings, retrieved from
  4. Times Higher Education World University Rankings, retrieved from University Rankings
  5. Hazelkorn, E. (2008). Rankings and the Battle for World Class Excellence: Institutional Strategies and Policy Choices, retrieved from
  6. Hazelkorn, E. (2018). Reshaping the world order of higher education: the role and impact of rankings on national and global systems, Policy Reviews in Higher Education, 2:1,4-31
  7. Department of Education and Training. 2016 international student survey infographic, retrieved from
  8. QS Enrolment Solutions. Global International Student Survey 2017 – The changing dynamics of international student recruitment, retrieved from
  9. European University Association (2013). University rankings and their impact – Report II. Retrieved from
  10. Marconi, G. and Ritzen, J. (2015). Determinants of international university rankings scores, Applied Economics, 47, 57, 6211 6227.
  11. Hazelkorn, E. (2008). Rankings and the Battle for World Class Excellence: Institutional Strategies and Policy Choices, retrieved from IMHE (PDF 401 KB)
  12. ibid
  13. $28,500 is the average of the $20,000-$37,000 range indicated by government for postgraduate course costs, excepting high cost course such as medical and veterinary sciences.
  14. Hazelkorn, E. (2018). Reshaping the world order of higher education: the role and impact of rankings on national and global systems, Policy Reviews in Higher Education, 2:1,4-31
  15. Why most universities should quit the rankings game, 8 January 2017, retrieved from University World News

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