CLOSE to one in five students drop out of Australian universities by the end of their first year.
They blame unhappiness with the subjects they chose, financial hardship, failing courses and the opportunity to upgrade to a better institution for the high fallout rate.
Latest figures released by the Federal Government show that international students attending Australian tertiary institutions have a higher retention rate.
At Southern Cross University in Lismore, three out of every 10 first-year students dropped out of their courses. The University of Sydney and the University of NSW each had 11 per cent drop-out rates, according to attrition, retention and progress data for 2008 just released by the Government.
The Batchelor Institute of Indigenous Tertiary Education in the Northern Territory had the highest leaving rate in Australia.
Overall, international students displayed a greater ability or willingness to get through the first year and continue with their chosen studies, the figures show.
In her review of the higher education sector, Professor Denise Bradley said each university should be set targets for improved rates of student retention.
In her report, Professor Bradley said factors affecting an individual's completion of a course were complex and could include the level of support from teachers and the institution, course content, course satisfaction, and the student's own expectations and circumstances.
A spokesman for Education Minister Julia Gillard refused to rule out retention targets for universities. He said performance funding would be allocated to universities on the basis of negotiated targets.
''The indicators will include a range of measures,'' the spokesman said. Representatives of the higher education sector were helping to develop a discussion paper on the issue that would be released for consultation within weeks.
Experts said solutions to improve the drop-out rate could include better advice for course choices, greater pastoral care and offering generalist studies in the first year to help students adjust to university life.
Dr Julie McMillan, from the Australian Demographic & Social Research Institute at the Australian National University, said dropping out gave many students opportunities. ''Some moved to different courses or institutions which showed as a drop-out,'' said Dr McMillan, who followed the issue when monitoring a group of students from year 9 through their university years.
''Some defer and return later, which isn't picked up by the statistics.''
International students often performed better than other students.
''They have made a bigger commitment to study than Australian students who are possibly still in their family home … there is a wider interest in the student being here and succeeding,'' she said. ''That acts as a higher motivation.''
Southern Cross University deputy vice-chancellor Bill MacGillivray said losing students cost universities, which had expended resources to attract them.
Southern Cross was launching a multimillion-dollar initiative next year to address its attrition rate, which was affected by a high number of mature-aged students deferring for work or family reasons.