A sustainable higher education model TEQSA will recognise is one where the finances and the academic operation hold each other up: enrolments diverse enough to survive the loss of one market, a cost base that does not depend on under-staffing, and a scale at which the academic staffing the Threshold Standards require can be paid for from tuition. TEQSA reads viability under Standard 6.2 and staffing under Standard 3.2 together, and a model that satisfies one by sacrificing the other fails both.
This article sets out how I think about that balance after fifteen years of building financial models for private providers going through TEQSA registration and renewal, and what assessors read as the markers of a business that will still be teaching in year five.
Why financial and academic sustainability are the same question
Standard 6.2.1 of the Threshold Standards requires the governing body to be satisfied that the provider is financially viable and sustainable, with the resources to deliver its courses and meet its obligations to students. Standard 3.2 requires enough academic staff, appropriately qualified, to deliver each course and to sustain scholarship. In a private provider the second is the largest line in the budget that the first must cover.
The tension shows up in the projections. A model that reaches break-even by year two on the assumption of one full-time academic per course, with everything else sessional, satisfies the spreadsheet and fails Standard 3.2. A model that staffs every course properly from day one, with a wholly domestic intake of thirty students, is compliant and insolvent. Assessors are experienced at seeing where the model has been made to work by squeezing one side or the other, which is why the financial evidence is discussed further in our article on meeting TEQSA's financial viability requirements.
Enrolment diversification: the sustainable higher education model TEQSA reads as resilient
The single risk factor I see assessors return to most often is concentration. A provider with ninety per cent of its revenue from one country, one agent network or one course is one policy change away from a material change notification under s.29 of the TEQSA Act.
The model assessors accept without argument is one where the enrolment plan names its markets and shows that no single one is load-bearing. In practice that means a domestic base, more than one source country where the provider is CRICOS registered, more than one course at scale, and ideally more than one mode of delivery. The projections should show what happens if the largest segment falls by half, and the board minutes should show that the scenario was discussed rather than filed.
Cost structure and the staffing ratio
The second marker is the shape of the cost base. TEQSA's own fee schedule is the smallest part of it: initial registration costs $14,700 for preliminary and $112,100 for substantive assessment on the 2026 fee schedule, before course accreditation fees. The recurring costs that decide sustainability are academic salaries, premises and the student support functions Standards 2.3 and 3.3 require.
In my experience the ratio that matters is academic salary cost to tuition revenue, and the model must show it staying in a range that pays for properly qualified staff while leaving a margin for the years when enrolments fall short. A model in which that ratio drops steadily because student numbers rise and staff numbers do not will be read as a plan to breach Standard 3.2 on a schedule.
What is the scale at which a private provider becomes viable?
There is no number in the standards, and I would be suspicious of anyone who gives you one without seeing your courses. What I can say from the models I have built is that a provider with a single AQF level 7 course, domestic students only and full-fee tuition rarely covers a compliant academic and support establishment below a few hundred equivalent full-time students, and that the timeline to reach that point is longer than most founders assume.
The reason is that the fixed costs of compliance arrive before the students do. An academic board, a course coordinator, a student support function, learning resources and the systems to report on all of them are required from the first intake. The founding cost of getting there is discussed in our overview of financial viability for TEQSA registration, and the strategic case for entering the sector at all is weighed in the pros and cons of private higher education in Australia.
How assessors read the projections
Assessors do not read a five-year projection as a forecast. They read it as a statement of the assumptions the governing body has adopted, and they test the assumptions. A growth rate with no marketing budget, or an international intake that begins before CRICOS registration could plausibly be granted, is read as a sign that the board did not interrogate its own model.
The record that helps is a board paper showing the assumptions, a downside scenario, the point at which the board would act, and what it would do. That is the non-delegation principle applied to finance: a consultant can build the model, but the board has to own it, and the minutes have to show that it does.
My view on building a model that lasts
The providers I have seen survive their first renewal of registration were not the ones with the most optimistic projections. They were the ones that planned for a slow first three years, funded the academic establishment before the revenue arrived, and diversified their intake before they were forced to. A sustainable higher education model TEQSA will accept looks conservative on paper because it is.
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— a five-year projection structure with the staffing ratios and downside scenarios assessors expect, drawn from our TEQSA registration and governance work with private providers. Get the template
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Frequently asked questions
Does TEQSA set a minimum enrolment for a higher education provider?
No. The Threshold Standards contain no enrolment threshold. TEQSA assesses whether the provider's resources and projections can sustain compliant delivery, and in practice the fixed cost of a compliant academic and support establishment sets the effective minimum.
What financial evidence does TEQSA ask for at registration?
Typically financial projections, evidence of the funds to cover the establishment period, audited statements where the entity has traded, and board records showing the governing body has tested the assumptions. Renewal applications from providers assessed as higher financial risk are asked for five-year projections and three years of audited statements.
Can a provider rely mainly on international students?
It can be registered on that basis, but TEQSA reads heavy concentration in one market as a viability risk, and a significant fall in revenue is a material change that must be notified within fourteen days. Diversified intake is read as evidence of sustainability.
How does staffing affect financial viability under TEQSA?
Standard 3.2 requires enough appropriately qualified academic staff to deliver each course and sustain scholarship. A financial model that reaches profitability by under-staffing will be read as non-compliant with Standard 3.2, so the staffing establishment has to be built into the model from the first intake.
Dr Brendan Moloney is CEO of Darlo Higher Education, Australia's largest specialist TEQSA consultancy. He holds a PhD from the University of Melbourne, is a Cambridge University Press author on governance in higher education, and has advised private providers on registration and course accreditation for more than fifteen years.