International student numbers hit record highs last year but a seismic shift is underway

As the end of the year crept up, Australia’s international education sector hit a new milestone.

For the first time ever, there were more than one million international student enrolments last year, 1,018,799 to be precise, despite the publicly available data only going up to September.

That’s almost 50,000 more than the entire previous year.

One million enrolments doesn’t equate to the number of foreign students in the country, because some enrol in more than one course. But a head count of international students also reached a record high in September at just under 825,000, according to the education department.

This new data, released in December, seems to suggest the government’s year-long endeavour to slow the flow of high-fee-paying foreign students hasn’t made a dent.

But under the surface, a seismic shift is already underway. Offshore student visa applications fell by almost 40 per cent in 2024, compared to the previous year. In real terms, that’s roughly 120,000 fewer prospective students seeking to study in Australia.

These are not students who had their applications delayed or denied under the government’s oft-changing visa processing rules — though visa approvals are also down — but those who never applied in the first place.

And according to the higher education sector, that’s a by-product of a chaotic crackdown on an industry that has long been heralded as amongst the best in the world.

“The message has gone out to our key student source markets that they’re not welcome here,” says Phil Honeywood, chief executive of the International Education Association of Australia. “And they’re voting with their feet.”

The migration debate

This year Labor embarked on what higher education expert Andrew Norton has called “by far the biggest reversal in policy” since international education was established.

First, by issuing a visa processing edict called Ministerial Direction 107 that forced immigration officials to prioritise applications for people with offers from institutions considered lower risk, using a cranked-up risk rating system, while increasing English language and savings requirements for students and doubling the visa fee.

And later by attempting to cap the number of international students allowed to start studying in Australia to 270,000 from the start of this year.

This was an unprecedented move, pulled against a backdrop of soaring migration rates, a cost of living crisis, record high rents and a looming federal election.

In response to the tricky combination, the major parties have both vowed to slash migration rates to pre-pandemic levels. International students, who make up roughly half of all temporary migrant arrivals, are first in the firing line.

Opposition Leader Peter Dutton labelled the many international students who seek to extend their stays beyond their course the “modern version of boat arrivals” last year.

Dutton’s comment came months after he used his budget reply speech to make clear that migration needed to come down to free up houses and he set a net overseas migration target of 160,000 (a commitment he has since walked back).

The Coalition has yet to outline a detailed plan to achieve this. Weeks out from the end of the year, they blindsided the government by announcing they would not support Labor’s bill to impose international student limits, despite Dutton previously vowing to set his own caps. 

Meanwhile, Labor had previously forecast net migration to fall back to 260,000 this financial year, but the mid-year budget update revealed that had blown out by 80,000 due to temporary migrants leaving the country more slowly than anticipated.

“I make no apologies for getting migration levels in Australia back to pre-pandemic levels and the work we’re doing with international education numbers is about that,” Education Minister Jason Clare told reporters this week.

“Peter Dutton blew up the student cap legislation in the parliament and, in the process, blew up his own credibility.”

More uncertainty on the way

The targeting of international students — and the delay in implementing a clear plan ahead of the new year — left the higher education sector scrambling to finalise enrolments and plug holes in their budgets.

Then, just days before Christmas and weeks out from the start of the university term, the government announced a new visa processing directive it argued would make the system fairer.

Under the old directive, institutions were split into three “risk” tiers, decided based on the number of their student visa applications that were rejected among other factors, and applications from the top group were processed faster than the rest.

In practice, it meant sandstone universities that typically attract the highest quality candidates got priority treatment, while smaller regional universities missed out. This was widely condemned by the sector, with Clare conceding it was unfair.

Instead, the new Ministerial Direction 111 allows each institution to access the priority stream until they reach 80 per cent of their international student “allocation”.

Those allocations are the same individual limits set by the government earlier this year, when they planned for the legislation to go through, with Group of 8 chief executive Vicki Thompson describing the move as a “backdoor to caps”.

“Despite there being no legislative basis for setting international student numbers, our universities have set budgets based on a number provided to them by government several months ago,” she says. 

“Now, with just days before the end of the year, and with little apparent rationale, this number has shifted again.”

Despite Clare repeatedly calling Ministerial Direction 107, which the new directive replaces, a “de facto cap”, there is nothing in the regulations that limits how many students higher education and vocational training institutions can enrol. Legally, all valid applications must be processed.

“The problem is, at the moment, there is neither a cap nor an alternative control mechanism in place,” former immigration department deputy secretary Abul Rizvi says. “So if there was a huge surge in applications … the government would have to process them and it couldn’t limit the number of visas granted.”

What the falling study visa application rate means for universities and the overall migration landscape is still an unanswered question, according to Rizvi.

He says it depends on two things: how the sector responds now that there won’t be caps in place and how the Home Affairs Department responds to the new directive.

“Leaving aside those two uncertainties, the key now is the rate at which over the next 12 to 18 months students and former students depart the country,” he says.

“Undoubtedly, there will be a lot of students who will be angry, there will be a lot of providers who will be in financial trouble, and the government will be under pressure from the opposition to show that net migration is indeed falling as fast as the government is predicting.

“You’ve got to create certainty if the industry is to know where things are headed, and at the moment, there is no certainty.”