The comments from University of Otago Associate Prof Paul Hansen come as new figures show both international and post-graduate numbers are falling across the country. Overall, student numbers at the university have fallen every year since 2010, when they peaked at 19,918.
Prof Hansen said declining student numbers across the sector was among a number of coinciding trends which had the potential to reshape the tertiary sector.
These trends included a more competitive market for international students, with China and India investing large amounts of money in their own institutions, a tightening in government funding and the growth of online learning. Online learning was growing at such a rate that provider Coursera was attracting between 10,000 and 20,000 new students a day, he said.
''I personally think we are potentially on the edge of a slightly changed environment or maybe a whole new era.''
These trends had the potential to hit student numbers at all tertiary education institutions, including the University of Otago.
Fewer students at Otago had implications for the region's economy as it was likely the largest organisation in the South Island.
''These issues are much, much bigger than the institution; it's the whole region, a lot of people are employed here. It's a $600-million-a-year business. That's a hell of a lot of money,'' he said.
The university was probably as important to Dunedin as the car industry once was to Detroit - which suffered hugely as car makers moved from the city.
''[If] the University of Otago gets a sniffle, Otago catches a cold.''
Prof Hansen was keen to point out that Otago University was in a better position than most to face the challenges ahead, with a significant ''war chest'' to fall back on.
However, if student numbers continued to decline for another five to 10 years things could start to bite.
A recent Ministry of Education report showed international student numbers in New Zealand had declined by 6% last year, with Education New Zealand chief executive Grant McPherson blaming the high New Zealand dollar, the continuing affect of the earthquake on enrolments in Canterbury and a ''more competitive'' international market for the trend.
Last month, it was revealed that international ''full-fee'' student numbers as of April were down by 9.5%.
Otago University international pro-vice-chancellor Prof Sarah Todd said yesterday a number of factors, including those mentioned by Education New Zealand, were making it more difficult to attract students.
''The reality is New Zealand is not always the No 1 choice anyway so [the rising dollar] ... means students start looking at alternatives,'' Prof Todd said.
The international market was very prone to fluctuations and it was important that institutions did not rely too much on the income it generated in the ''good times'', she said.
The university had been careful not to be too reliant on international tuition fees, which was one of its many revenue streams, she said.
Figures released to the Otago Daily Times by Green Party MP Holly Walker showed Otago University was not the only institution where post-graduate student numbers were declining. The figures she obtained under the Official Information Act show that as of March or April numbers compared to the same time last year had fallen by 8.5% at Otago, 8.4% at Waikato University and 7.1% at the University of Auckland.
Of the universities she received complete figures from, only Victoria had increasing numbers - up by 2.1%.
Ms Walker said the drop in numbers was likely connected to the Government's decision to scrap student allowances for post-graduate students.
She said cutting the allowance had disproportionately affected people from poorer backgrounds who were often more reluctant to take out large student loans.
''That's a real shame, because it's likely to produce a cohort of post-graduate students who are less diverse than what we had in the past.''
Tertiary Education Minister Steven Joyce said a number of factors including demographic changes and the economy improving had resulted in fewer enrolments overall, which included post-graduate students.
''There may also be some people that choose not to participate in post-graduate study if a very generous student support scheme is made slightly less generous.''
The decision to scrap allowances for post-graduate students was made because the amount of money required had increased to a point where it was not sustainable.
