Although many of the university's international students made their way to Australia before COVID travel restrictions were implemented, those starting in second semester or planning to study here next year have been unable to travel.

It means the university has not suffered as bigger hit as city universities from the downturn in international students this year, but it will bite harder next year.

Federation University vice chancellor Professor Duncan Bentley believes it will be mid to late next year before international students can return to Australia.

Last year there were more than 10,300 international students at Federation University who contributed about 60 per cent of the institution's fee revenue.

But Professor Bentley says rather than the shortfall leading to cuts to jobs and services it's an opportunity to create a flexible "permeable" university and build on partnerships with businesses and the Ballarat community.

Among them is working with the City of Ballarat to revitalise the CBD.

"We have all these precincts in the centre of the city we want to rejuvenate with them (council) to make Ballarat a thriving university town," he said.

The university has been delivering content online over the past six months and it's a feature of courses likely to continue into the future.

Professor Bentley said many international students have continued their studies online because they want the Australian qualification they have been working on, and it's a market he is keen for the university to explore further.

"If you look at the population particularly across Asia, you have a percentage who want to come here ... they want face-to-face teaching they love the Australian experience, the lifestyle, the work experience we can give and that's a source of one of our biggest exports that two-way trade," he said.

"And then you've got to look at the emerging middle class in Asia who can't necessarily afford to be here but there could be an articulation where they come for a period of time, or do their bachelor degree in their home country and their masters here ... then there are some countries like Vietnam or Myanmar who don't want the brain drain where they are losing their top talent who come here to study and do work experience and stay here we we can move to fully deliver qualifications in-country."

He said the university was committed to providing good quality education overseas, as well as on-campus, and while the expansion had been planned the COVID restrictions had fast-tracked the process and created greater acceptance of digital and online learning overseas.

"In Australia we were already advanced in online delivery but in Asia culturally it's been less accepted and this pandemic means it's gathering acceptance from people who were otherwise suspicious of it."

For domestic students too the shift online is likely to remain part of courses into the future with fewer lectures in lecture halls.

"Unlike a big lecture theatre where you can go to sleep in the back of a hall, in a digital room you can see people fall asleep quite quickly," he said.

"Learners now are really adept at gathering information ... that can be prepared in a much more engaging way. It's not a case of reading a dry old text you've got all sorts of documentaries, films, snippets of information you can really bring content alive with, then come to class energised and engaged with questions you can critically analyse as a group and have an engaged discussion which brings up and teases out soft skills that are in demand like communication, critical thinking and analysis."

Professor Bentley said the university needed to "refashion" itself to find another $40 million to make up revenue from international students and other sources.

While voluntary redundancies are being offered in response to the reduced income, Professor Bentley is trying to avoid the wide-scale job cuts that metropolitan universities have undergone.

"Those who decide they would like to take the opportunity to go we will make savings from provided we manage the workflow well. As will all the other actions we are taking in order to make ourselves more sustainable going forward.

"We will work with everyone to explore new revenue generating possibilities. You don't cut your way to growth."

Among those possibilities is using spare space on campus to build partnerships with local businesses and organisations in the same way the university has the tech park at Mount Helen and the business centre at the SMB campus in Ballarat Central.

"We need to use our spaces better and what we want to do is make sure we are bringing more industry on campus," he said.

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"We've got the oldest established tech park in the country on our campus, at SMB we've got small businesses, we're going to move our business centre in there so they will be working together, teaching education is already done in schools and health training in the hospitals and health health system ... so then our campuses become far more permeable in the sense we have businesses, maybe health clinics, schools all embodied on campus so you don't actually see you're going on to campus but going into a learning precinct with all sorts of start-ups, sustainable communities, living labs that transform our use."

This month's federal budget included funding for research and development for small and medium sized businesses and Professor Bentley believes this will help get them on to campus.

There were also measures to reduce fringe benefits tax on reskilling and upskilling of employees as their jobs change, which Professor Bentley believes Fed Uni is in a unique position to be able to capitalise on,.

"With partnerships, community, organisations and businesses are really catching on to the fact that big strong partnerships mean we can leverage the small resources we've got to do big things."