CENTRAL Queensland University, whose business has depended heavily on foreign students hoping to win visas as skilled migrants, may run out of cash by 2011, a report warns.

The credit review report by the Queensland Treasury Corporation points to the unusual predicament of CQU with a loss-making regional campus in Rockhampton underwritten by overseas students in capital cities and falling student numbers in both markets.

"Without the use of its restricted purpose cash (estimated at an average $42million over 2009-2012), CQU has no financial capacity to withstand any adverse impacts on its business," says the report, released today.

The university forecasts cash for general operations to be overdrawn by almost $5million by the end of the 2011 financial year.

Changes in skilled migration rules, student dissatisfaction, concerns about educational quality, and the competitive disadvantage of a regional operator are among the reasons for CQU's troubles.

Despite the decline in enrolments, the overseas student business remains profitable, the Treasury report says. And CQU has a strategy to improve both its local and international operations.

"While the strategies and actions appear sound, the success or otherwise will only become apparent over the next one to three years," the report says.