Australia's top universities have faced a significant decline in global rankings, with the University of Melbourne dropping from 37th to 39th in the Times Higher Education (THE) index, marking its worst performance.

Seventeen Australian universities fell in the rankings for 2025, with several, including the University of Western Australia (UWA) and Curtin University, experiencing their lowest positions since the 2016 index.

Concerns are mounting regarding new federal caps on international student numbers, set to begin in 2025, which could further diminish Australia's international standing in higher education and impact the revenue of leading institutions.

Factors contributing to this decline include pandemic-related lockdowns and a decrease in teaching and research reputation, which have adversely affected overall scores.

For the upcoming academic year, UWA anticipates a decrease of over 2,000 international students, while Curtin University expects to lose nearly 600, further straining their financial health.

Federal Education Minister Jason Clare has emphasized the need to focus on student success and equity rather than solely on rankings, advocating for reforms to enhance the higher education system.

The lack of international student growth in Western Australia over the past decade has negatively impacted the sector, which heavily relies on these students for financial support.

Experts have raised questions about the effectiveness of the rankings in accurately reflecting the state of the higher education sector, noting that they may not align with institutions' priorities.

Phil Baty from Times Higher Education warned that declining global academic reputation and funding levels for Australian universities, coupled with cuts in international student numbers, pose serious challenges.

Australia now has only 10 universities in the top 100 globally, down from 12 in 2021, highlighting a concerning trend for the nation's higher education landscape.

Overall, the financial health of Australian universities is deteriorating due to inflation and stagnant domestic demand, making them more vulnerable than before the pandemic.

The University of Sydney has also seen a decline, falling to 61st place, its worst result since 2018, reflecting a broader trend of decreasing rankings among Australian institutions.