Macquarie University is facing a domestic and international enrolment shortfall that it predicts will result in "zero growth" in student numbers next year, forcing hardline budget measures including a freeze on hiring staff.

As enrolments from China drop at institutions across NSW and the number of graduating year 12 students stagnates, the university warned it would face a "significantly worse" budget position than expected unless it took action.

Macquarie University has enforced a staff hiring freeze. Supplied

"The external circumstances in which we operate have changed significantly," Vice-Chancellor Bruce Dowton said in a letter to staff. "Enrolment growth domestically and internationally has slowed significantly at a time when our base operating costs continue to rise.

"Current projections are that there will be zero growth in load [fulltime student numbers] in 2020."

The university had originally expected to return to surplus in 2021, but that forecast was based on growing enrolments.

Australian universities rely heavily on income from international students, particularly from China, but this leaves them vulnerable to market fluctuations.

Macquarie is less exposed to the Chinese market than bigger universities, but a senior executive at another institution told the Herald middle-tier universities would likely be the first to feel pressure as the market softens.

That softening is under way; figures released in August show the number of Chinese students beginning to study at NSW universities identified a drop of 3.4 per cent or 866 students year on year.

Another concern was an 11 per cent drop in the number of Chinese students arriving for preparatory programs, which act as a pipeline for university commencements.

Macquarie's domestic and overseas student commencements also fell from 2017 to 2018, and there was a 1.5 per cent drop in fulltime equivalent students in 2018, according to a report from the NSW Auditor-General.

Andrew Norton, an honorary fellow at the Centre for the Study of Higher Education at Melbourne University, said the number of students graduating in NSW high schools was steady, which also curtailed growth in domestic numbers.

But if both international and domestic enrolments stagnated while academic salaries increased, universities would be "trying to do more with less in real terms," said Mr Norton.

Macquarie's staff were told on Thursday the hiring freeze had begun the previous day. No more jobs would be advertised and no offers made unless a committee decided the circumstances were "truly exceptional".

Renewals of fixed-term contracts will also not be renewed unless approved by the committee. The university announced it would dissolve the Faculty of Human Sciences, with its subjects - cognitive science, psychology and education - to be moved to other faculties.

The branch president of the National Tertiary Education Union, Nikola Balnave, called on Professor Downton to "tell us what's going on. There's a lot of jobs on the line, I'm guessing. Where are the cost savings? How many redundancies are they going to have to pay out?"

A spokeswoman for Macquarie University refused to comment beyond saying Professor Dowton was unavailable for interview.