This study estimates a cost function for higher education in Australian universities using
pooled series of cross-sectional data. The study enabled the quantification of the cost
differences between levels of studies and subjectareas. The cost function is useful in an
number of ways. It can be used by universities to evaluate the effect of changes in course
structure and size on university budgets. It may also be used by universities to help develop
pricing policy for courses for fee paying courses. In this paper it was used to derive estimates
of the overall cost of providing higher education to overseas students.