China and India were the biggest source countries for international students, and education was Australia’s third largest export after iron ore and coal - accounting for a record $21.8 billion over the past year.
Minister for Education Simon Birmingham said in a statement, the growth in student numbers showed the government’s commitment to the international higher-education industry.
“The benefits of international education flow through to sectors such as retail and tourism, supporting over 130,000 full time jobs across our major cities, and in key regional areas where international education has established a strong foothold,” he said.
“It's hard to know if it will last forever, but there is no signs of it slowing down.”
Higher education remained the biggest education area for international students, with 43 per cent of those at universities.
A further 26 per cent of students were enrolled in vocational education and 21 per cent were in English language intensive courses.
Melbourne University senior economics lecturer Dr Michael Coelli told SBS the government’s streamlining of the student visa process, as well as opportunities for permanent residency, were attractive to students from Asia.
"There is this kind of huge latent demand there from Asia of people looking to go to universities in other countries,” he said.
“It's hard to know if it will last forever, but there is no signs of it slowing down”.
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Dr Coelli said while the focus of universities to entice students from China and India has helped numbers grow, there were dangers in such a focus.
He said while Australia’s industry usually looked at the US and Europe as competitors, the Chinese government’s major investment in their domestic higher-education industry posed a threat.
"Part of the reason that many students come here are because opportunities in their home countries are somewhat limited,” he said.
“We are very reliant on particular source countries, like China in particular, but also India. If we can expand our source countries a little bit more it might help going forward."
The latest government report included data from a survey of 65,000 international students about their experiences.
The results found 89 per cent were satisfied or very satisfied with their overall experience in Australia.
Catherine Gomes, a senior lecturer at RMIT University in Victoria and focusing on international education, told SBS that positive word-of-mouth was the biggest contributor behind the growth in student numbers and that making sure students had a positive experience should be the top priority.
"The fact (that in) eight years time we want to increase the international student intake to almost a million, you need to actually keep up with student services,” she said.
Ms Gomes said many students aren't aware of their rights in the workplace or the housing market, which made them vulnerable to exploitation.
