The federal government will attempt to suppress international student numbers by ordering a “go-slow” on visa processing once applications reach a target for each university.

Immigration officials have been instructed to treat student visa applications as a high priority up until education providers reach a “prioritisation threshold” set by the government.

Those thresholds amount to 80 per cent of the caps the government had sought to impose on universities and vocational trainers, which the Coalition and Greens rejected.

After that, visa processing will fall to a “standard” level, bumping applications into a slower-moving, less-resourced queue.

But the direction notes that it is not to be taken as a hard “limit” or “cap” on the total number of visas that may be granted to any provider.

With its bill unable to pass through parliament, the government has found a legislative workaround by rewriting the minister’s orders to public servants.

Finance Minister Katy Gallagher said the government’s hand had been forced.

“[The direction] is to try and manage student visa processing properly. We did want to have it done through legislation … with the caps that we took to parliament. They weren’t able to get through,” Senator Gallagher said.

“So the ministers have looked at other ways to manage the incoming student numbers in a way that we can best meet the needs of the universities but also the numbers of people arriving in Australia.”

The new directive will supplant an earlier direction that forced immigration officials to prioritise applications from foreign students with offers from institutions considered low-risk, which the sector and opposition had labelled “disastrous” for regional universities.

Education Minister Jason Clare wrote to universities on Wednesday evening confirming that Ministerial Direction 107 would be replaced with the new directive “based on feedback from the sector to make the existing system better and fairer”.

Senator Gallagher said on Thursday that the new directive would allow applications to “flow to regional and smaller universities” more fairly.

Minister threatened to keep ‘disastrous’ directive if laws failed

The original directive was implemented a year ago to deal with an influx of student visa applications but since then it has been widely criticised as a “sledgehammer approach” that disproportionately impacted smaller institutions.

The sector anticipated that the directionwould be replaced imminently, the ABC reported earlier this week, despite Mr Clare warning that it would remain in force if the government’s plan to limit the number of international students able to enrol next year to 270,000 was blocked by parliament.

The rewrite comes after regional universities slammed the current system as “disastrous” for them.

Universities Australia had been calling for Ministerial Direction 107 to be revoked since June, saying it had “wreaked havoc” in the sector and inflicted financial harm on universities, particularly in the regions and outer suburbs.

In a statement on Thursday, Universities Australia chief executive Luke Sheehy said the government had finally listened.

“This is the commonsense decision that was desperately needed to deliver some of the certainty and stability our universities have been seeking,” Mr Sheehy said.

But he urged the government as they try to bring down migration not to do it at the expense of any one sector, “particularly not one as crucial to our economy as education”.

About 60,000 fewer higher education visas were granted in 2023-24 — which included six months under Ministerial Direction 107 — compared to the previous year.

As part of the government’s plan to limit international student enrolments, earlier this year each educational provider was given an indicative cap based on its previous levels of international student commencements and the make-up of their student bodies.

According to those figures, prestigious universities such as the Australian National University and the University of New South Wales were set to be some of the biggest losers, with their 2025 international student enrolments reduced by close to 15 per cent compared to 2023 figures.

Vicki Thomson, chief executive of the Group of Eight, which represents some of Australia’s largest universities, said the government had replaced one flawed process with another.

“Having set targets for each Australian university’s international enrolments for 2025, it makes no sense that prompt government support in processing visas will only apply to 80 per cent of that target,” she said in a statement.

Announcing the change so close to the end of the year would also create further uncertainty for providers and international students, she added, accusing the government of “shifting the goalposts yet again”.

Both Labor and the Coalition have said they want a lower net overseas migration (NOM), which includes international students.

The mid-year budget update, released on Wednesday, revealed net overseas migration will grow by 340,000 this financial year — which is 80,000 more people than the government’s earlier expectations.

Opposition Leader Peter Dutton said in May the Coalition would aim for “about 160,000”, but more recently he refused to commit to a number and instead said the Coalition would make an assessment if it was elected to government.

Higher education and vocational international students made up about 35 per cent of temporary migrant arrivals in the previous financial year, according to Australian Bureau of Statistics data released this month.