A general view of Sydney University campus on April 6, 2016 in Sydney, Australia. Brendon Thorne | Getty Images

Australian universities have allowed some students from mainland China to circumvent travel restrictions and return to study. But critics say that practice may inevitably import the infectious coronavirus to local campuses. The country last month banned the entry of most non-resident foreigners, who left or transited mainland China within 14 days prior to their arrival. The decision came as fears over the new flu-like coronavirus spread beyond China — where most of the cases and deaths have occurred — to more than 60 countries worldwide. At least 93,000 people have been infected globally, and more than 3,000 people have died so far. Due to the government ban, many Chinese students were left stranded outside Australia, just as the new academic year started in February.

Australia is, in effect, outsourcing its quarantines to other countries that have not been consulted over this and in some cases are not prepared for it. Salvatore Babones associate professor at the University of Sydney

To circumvent the ban, some students traveled to a third country where they spent 14 days in self-quarantine before entering Australia. In some cases, universities have provided financial assistance for students to make those trips, while others provided online study resources for students unable or unwilling to return because of the restrictions.

An 'unconscionable' practice

That practice raised concerns this week after a 20-year-old student at the University of Queensland tested positive for the disease. The student from China had traveled to Dubai for at least two weeks before entering Australia on Feb. 23. He became unwell two days later, according to the Queensland health ministry. Authorities were said to be looking into where he may have contracted the infection. Media reports said that many students who were supposed to "self-quarantine" themselves in a third country had been out and about in public. "It is unsustainable but — more importantly — unconscionable for Australia to be encouraging students to take an end run around travel restrictions by traveling to a 'third country,'" Salvatore Babones, an associate professor at the University of Sydney, told CNBC.

The Government has never encouraged students from mainland China to see out a 14-day period in a third country, as they could be impacted by future travel restrictions put in place by those countries. Dan Tehan Minister for Education, Australia

Babones, who is also an adjunct scholar at the Centre for Independent Studies think-tank, said students are mostly coming in through Thailand, and also through Dubai, Malaysia, and Japan. Both Thailand and Australia have reported more than 40 confirmed cases of the new virus. Babones said the practice of having students self-quarantine in a third country, may inevitably import the virus to Australian universities and leave students who get infected in transit stranded in another country. "Australia is, in effect, outsourcing its quarantines to other countries that have not been consulted over this and in some cases are not prepared for it," Babones said.

Australian Minister for Education, Dan Tehan, told CNBC that the safety of Australians is the government's number one priority and that it has always acted on the advice of the medical experts. "The Government has never encouraged students from mainland China to see out a 14-day period in a third country, as they could be impacted by future travel restrictions put in place by those countries," Tehan said in a statement. "However, there is nothing within Australia's current travel restrictions to stop them (from) doing so." Australian universities told CNBC that they are following government guidelines and travel directives to decide which students they allow back onto campus.

Billion-dollar loss and more

Education is one of the main sectors in Australia that experts, as well as the central bank, say would be most affected by the coronavirus outbreak. Chinese students make up the largest portion of international students in Australia, accounting for about 0.6% of the country's GDP. Data from the education department showed that in 2019, there were more than 261,000 Chinese nationals enrolled in local educational institutions at various levels. In the higher education sector, 37.3% of foreign enrolments were from mainland China. Babones said that Australian universities are more exposed to the China market than institutions in other countries — nine of the country's leading universities rely on Chinese students for a combined 2.8 billion Australian dollars ($1.85 billion) per year in tuition revenue. If the virus epidemic peters out by mid-year and accounting for numbers of students still caught offshore, those institutions would likely suffer a combined A$1 billion revenue loss, and half of that would be concentrated at Sydney's three urban universities, he added.

The International Education Association of Australia warned of a hit between A$6 billion and A$8 billion if Chinese students are unable to attend the first term, the Financial Times reported. IEAA did not respond to CNBC's request for comments. Moody's said last month the impact on Australian universities would remain manageable if the virus was contained within the next few months. A longer outbreak has the potential to "materially dent revenue and cash reserves," it said.

What the universities are doing

From helping affected students to transit via a third country to providing a plethora of online learning resources, some universities told CNBC how they were addressing the travel restrictions. Western Sydney University said it offered affected students a one-off $1,500 Australian dollars ($993) contribution to offset expenses if they chose to transit in another country. Australian National University said all affected Chinese students — about 4,000 of them — would be able to seek up to A$5,000 in reimbursement for costs incurred due to the travel ban if they remain enrolled after Jun. 3. The university is also providing financial assistance for students who undertake remote participation in the first semester. The University of Sydney said it has made available online supported learning for 800 courses and deferred the start of the semester for a small number of courses at the business school. Around 14,000 of its students from China remain overseas. The University of Melbourne said it is offering support grants of up to A$7,500 to help affected students with unanticipated expenses incurred due to the travel ban.

A customer walks past empty toilet paper shelves at a supermarket in Sydney, Australia, on Wednesday, March 4, 2020. Brendon Thorne | Bloomberg | Getty Images