Australia has established itself as a global leader in international education, boasting the second-highest share of international students worldwide. Each year, students contribute approximately AU$30 billion to the country’s economy, making international education its fourth-largest industry. However, Australia’s international education sector is undergoing changes as its government introduces new regulations to manage the influx of international students.
Taking effect in 2025, the changes aim to curb migration levels by capping international student numbers at 270,000. This cap is part of a broader governmental effort to manage migration levels more tightly, with significant implications for universities, vocational institutions and the Australian economy at large.
Visa approvals and student numbers
The growth of Australia’s international education has been remarkable throughout the years, with foreign students paying up to four times more in tuition fees than their domestic counterparts. This revenue has been pivotal for universities, especially as government funding for research, teaching and campus infrastructure has faced challenges.
One of the most striking indicators of the sector’s scale is the number of student visas granted each year. According to the Department of Home Affairs, visa approvals peaked at 261,317 in the 2022–2023 financial year.
Chart 1 highlights this peak, which was driven by pent-up demand following COVID-19 restrictions and efforts to clear backlogs. However, recent policy changes have led to a significant decline in visa approvals, with 60,000 fewer visas granted in the most recent financial year compared to the previous one.
Despite this drop, the immediate impact on student numbers may not be fully realised for some time. Once international students arrive in Australia, they often stay for the duration of their courses, which can last multiple years. As a result, the number of students in the country on visas remains high, even as new commencements decline.
Enrolment trends: record numbers amid changing regulations
Despite the drop in visa approvals, the number of international students enrolling in Australian educational institutions remains historically high. The proposed legislation gives the government new powers to regulate the enrolment of international students by provider, course or location, and to pause the registration of new providers or courses. This regulatory shift could dramatically alter enrolment patterns across Australia’s education sector.
By the end of 2024, between 700,000 and 800,000 international students are expected to have enrolled across various educational sectors, from English language schools to university degrees.
Chart 2 illustrates that in the year to May 2024, there were 810,960 international student enrollments—a 17% increase on pre-COVID 2019 figures when enrolments were at an all-time high. The vocational education sector, in particular, has seen a significant 50% increase in enrolments since before the pandemic.
International students and the Australian rental market
The government has justified a cap on international student numbers, pointing to the ongoing rental crisis and the strain on student housing. According to an analysis by the Property Council of Australia, international students are mostly concentrated in just 13 local government areas (LGAs), where they account for over 10% of the rental market. Across Australia, international students represent about 4% of the total rental market, with their presence mainly impacting specific regions.
Chart 3 shows that in areas like Adelaide and Sydney’s Burwood suburb, international students constitute nearly a quarter of all renters. Yet, in three-quarters of local government areas, they account for less than 1% of renters, suggesting that the cap may have a limited impact on the broader rental market.
Backbone of the international education sector
The financial contribution of international students is critical to many Australian universities. In 2022, international student fees generated AU$8.6 billion, a substantial portion of which supported universities struggling with government funding shortfalls. For the prestigious Group of Eight (Go8) universities, international student fees make up a large part of their revenue.
Chart 4 shows that at institutions like the University of Sydney, international student fees account for 47% of total revenue, while at the University of Melbourne, the figure is 33%. Other universities, such as the Australian National University (21%) and Monash University (31%), also rely heavily on this income.
With the upcoming cap on international student numbers, there is concern that universities could face financial challenges, potentially resulting in budget adjustments that may affect staffing, research funding and infrastructure projects. The cap may reduce these important revenue streams, requiring institutions to make more careful financial decisions.
Conclusion
The government’s new policies, which are aimed at regulating migration and managing the economic impacts of a growing student population, are likely to reshape the international education sector in several ways. As the country adjusts to these new regulations, the implications for universities, local economies and the students shall unfold in the coming years, with data and statistics playing a crucial role in understanding the full impact of these changes.
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