Commentary: Caps on international students risk crippling Australia’s academic reputation

SYDNEY: Australia’s proposed caps on international students risk jeopardising its regional relations, the financial viability and academic standing of its universities, and its reputation as a welcoming destination for foreign nationals.
Australia has provided quality higher education to international students for decades. They have come mostly from the surrounding region, especially China and India. They make a major contribution to its university and research sector and the country as a whole. Many attain their doctorate degrees in Australia and stay to work in academia. 
International enrolments comprise over a quarter of total enrolments in higher education and the proportion at some universities reaches almost 50 per cent.
But in a higher education system that governments of the both conservative Liberal Party and centre-left Labor Party have long allowed to become significantly underfunded relative to its Organisation for Economic Co-operation and Development peers, international student fees are now vital to sustain university operations, including critical research and other functions. 
In 2019, the last full year before Australia closed its borders to keep COVID-19 away, the education industry was worth US$27 billion and was Australia’s fourth-largest export.
In 2024, international enrolments have exceeded pre-COVID levels – but a national debate over migration and its impact on housing prices has had political consequences.
Two national inquiries into visa irregularities uncovered significant corruption, leading to a government crackdown on so-called ghost schools that offered visas without education and higher barriers for students from certain countries to enter Australia.
International students have been caught in the crosshairs of these rising national concerns. Though there is some evidence that rebounding international enrolments were impacting rental prices, more than four in five international students return home after completing their studies.
Undeterred, Canberra is considering capping international enrolments starting in 2025. The self-styled “Group of Eight” club of research-intensive universities and their research output would be the most impacted because they attract the majority of international students. 
While this may create opportunities for regional or smaller universities, the longstanding preference for large urban environments among international students makes this an unlikely upshot.
International scholarship-holders hailing from “key partners” may be exempt from the proposed caps, but this carve-out is unlikely to placate private providers – more than half of whom have been found to be at high or moderate risk to revenue shortages and significant job losses. 
Universities have been quick to point to the arbitrary nature of proposed caps and the consequences. A common argument has been that the caps are unnecessary given that increasingly higher rates of visa refusal already reduce migration numbers. 
The sector’s peak body has identified a A$4.3 billion (S$2.8 billion) economic hit over the last six months and projects job losses up to 14,000 from the cuts. This aligns with another macroeconomic analysis which found that international student spending contributed over half of Australia’s total economic growth for 2023. 
The blunt nature of the proposed caps risks damaging both the higher education sector and Australia’s reputation for welcoming international students.
The Canadian experience provides a cautionary tale. After reducing study permits by 35 per cent and raising the rate of refusal for student visas, students turned to other countries which saw major declines in revenue for higher education institutions in various provinces.
Back in Australia, ministerial control is another widespread area of concern. 
A new proposed national body, the Australian Tertiary Education Commission (ATEC), is supposed to coordinate state and federal bodies, including providing more coordinated advice on resource allocation and planning. 
The proposed structure includes unprecedented levels of ministerial intervention, but it may well be that ATEC is empowered to develop specific limits on the proportion of international students at individual universities, and on international enrolments within popular areas such as business.
The government has also proposed expanding placements in areas such as teaching and nursing courses to induce international students into these areas, but this seems to have dubious chances of success. Students who miss out on their chosen university – mostly in Australia’s largest cities – would be less likely to select a regional institution in Australia than they would be to choose another country altogether.
A further concern that has received too little attention is the impact on Australia’s knowledge diplomacy, soft power and regional relations. The large majority of Australia’s international students stem from the region, mostly from East and Southeast Asia, and, until the recent imposition of higher visa refusal rates, growing numbers from India and Nepal.
Reminiscent of 2009, when attacks on Indian students were widely reported in the Indian press, concerns have already been raised in Indian media, who pose the prospect of Indian students choosing to study elsewhere. 
The proposed caps are at odds with the federal government’s expressed priority to enhance relations with South and Southeast Asia, including the important arenas of education, skills and people-to-people links.
While there may be valid policy concerns with the consequences of Australia’s surging intake of international students, Canberra should reconsider jeopardising long-term national interests to further short-term political concerns. 
Otherwise, the proposal risks economic pain and Australia’s regional reputation as a welcoming destination for international students.   
Anthony Welch is professor of education at the University of Sydney. This commentary first appeared on East Asia Forum.