The international education industry is big business.

Australia has the second-highest share of international students globally, trailing only behind Luxembourg.

Those hundreds of thousands of students bring in about $30 billion to the economy each year, making it Australia’s fourth-largest industry according to Bureau of Statistics data. 

Or, as Education Minister Jason Clare puts it, “the biggest export we don’t dig out of the ground”.

Since the 1980s — when Australia led the way in pioneering international education — successive governments have enjoyed the benefits of these students, who pay up-front sometimes four times what domestic students do for the same degree.

But now the government is cracking down on the sector amid a wider push to bring down migration, in what Australian National University higher education expert Andrew Norton has called “by far the biggest reversal in policy” since international education was established.

It has already brought in a slew of changes aimed at weeding out bogus applicants, including changed visa processing priorities, more stringent entry conditions, and a doubling of the application fee, which have led industry bodies to warn that visa applications are plummeting and job cuts will soon follow.

But it’s the contentious plan to cap the number of international students able to study at Australian institutions from the first day of next year that had many in the sector holding their breath. 

On Tuesday, they finally had some answers: The number of international students able to start their studies next year will be capped at 270,000 across the higher education and vocational sector under the government’s planned reform, with individual limits to be placed on specific providers.

This will equate to about 7,000 fewer commencements than in pre-pandemic times and about 53,000 less than last year, according to government analysis. 

There’s a lot at stake and plenty of big numbers being thrown around, so let’s take a look at the data.

How many international students are getting visas?

Universities Australia chief executive Luke Sheehy issued a stark warning earlier this month: If international student visa approvals continued on their current trajectory, 14,000 university workers could lose their jobs.

The calculation is based on two key figures. The first is the estimate that every four international students support one staff member with their fees. The second is that in the most recent financial year, the number of student visas for people attending higher education institutions had fallen by 60,000 compared to the one before.

“Even without legislative powers to cap international students, the government has already taken a sledgehammer to the international education sector,” Mr Sheehy said.

But looking at higher education student visa approvals over the past two decades, a more complex picture emerges. While approvals dropped sharply in the 2023-24 financial year, that was coming off a post-COVID spike well above any previous year.

According to Professor Norton, 2022-23 saw an abnormal number of visa applications thanks to pent-up demand during the COVID period. The large number of visas granted — 261,317 — was also boosted by efforts to clear backlogs in the system.

But even with the fall-off from the record high, more international students had their visas approved in the last financial year than nearly every year since 2005.

It’s this consistent growth that the government says it’s keen to curb.

When you’re talking about visa applications, it’s important to remember that there is likely to be a delay before a drop in visas being granted starts to impact actual student numbers. 

That’s because once international students arrive, they often stay for years to complete their course. 

“We did see pretty strong demand and visa grants up to the end of 2023 … that means the number of people in Australia on student visas will still be high even if the number of commencements has dropped this year and will drop again next year,” Professor Norton said.

Where are international students studying?

Visa approvals are just one part of the puzzle. Another way of measuring the scale of the sector is with enrolment numbers.

This can be tricky as the number of enrolled international students fluctuates throughout the year as new students arrive to start their courses and others graduate.

Professor Norton estimates that by the end of the year, somewhere between 700,000 and 800,000 individuals will have enrolled in higher education settings, from English language schools to university degrees, at some point over the past 12 months — more than there’s ever been.

In the year to May, there were 810,960 international student enrolments (including in schools, English language courses, vocational education and training, higher education and non-award) — a 17 per cent increase on pre-COVID 2019 figures.

The majority were enrolled in higher education institutions, but the highest growth since before the pandemic was in the vocational sector, where enrolments increased by about 50 per cent compared to pre-pandemic numbers. 

The cap announced on Tuesday will only apply to vocational training providers and higher education institutions. 

Mr Clare said this growth had brought back the “shonks … seeking to exploit the industry and make a quick buck”.

“And we’re implementing a number of reforms to tackle that, including most recently the shutting down of more than 150 dormant or ghost colleges, places that aren’t really operating to provide an education for international students but are really a back door just for people to work here.”

The proposed legislation would give the minister powers to limit the enrolment of overseas students by provider, course, or location and pause the registration of new providers or courses. 

The bill (but not the recently announced cap) would apply to 1,500 international educational providers, of all shapes and sizes. And some will be able to weather a drop in enrolments better than others. 

Peter Hendy, chief executive of Independent Higher Education Australia, told the inquiry earlier this month that almost half of the entire private education sector was set up with international students in mind, so “there are many who have a hundred per cent international student bodies”.

Across the private higher education landscape, he said, about 47 per cent of all students hailed from overseas.

Would slashing international student numbers actually cool the rental crisis?

One of the reasons given for the government’s clampdown is the need to free up homes as the rental crisis continues unabated.

In his budget speech, Treasurer Jim Chalmers said international student enrolments had outpaced the creation of dedicated student housing, putting pressure on rents and making “finding housing harder for everyone”. 

But while rental vacancy rates are tight everywhere, international students aren’t spread evenly across the country.

Analysis by the Property Council of Australia found there were just 13 local government areas (LGAs) where international students made up more than 10 per cent of the rental market, while in three-quarters of all government areas they accounted for less than one per cent of renters.

All up, international students make up about 4 per cent of Australia’s total rental market, which includes purpose-built student accommodation.

The areas with the highest proportion of international student renters were Adelaide and the Sydney suburb of Burwood, where they were just under a quarter of all renters.

But a separate analysis of the Sydney, Melbourne and Brisbane rental markets by SQM Research found even in suburbs where international students made up a greater share of renters, vacancy rates were not any lower than in other parts of the city.

Just one locality among the top 10 suburbs for each city had a vacancy rate lower than the citywide average, which was Parkville in Melbourne.

Advocates say that is evidence that international students are not to blame for the housing crisis.

The Property Council’s Student Accommodation Council executive director Torie Brown said their analysis determined that even if rentals occupied by international students were opened up, it would make little difference because most were renting properties that often were not of interest to Australian families or other renters.

“The reality is international students are not competing for family homes in the suburbs,” Ms Brown said.

“They’re far more likely to be looking for purpose-built student accommodation or apartments in CBDs or close to universities.”

If there was a large drop in international student numbers, she said it would free up some student accommodation and “some” apartment stock close to universities but it would not have a significant impact beyond that.

Ms Brown added she believed the cap was a sustainable figure.

Professor Norton agrees that cutting international students won’t be a quick fix for Australia’s housing woes, but with time he believes it could make a difference. 

“Once you take into account the dependents of the students, you’re probably looking at 900,000 people,” he said.

“It’s not plausible to say that 900,000 won’t have an impact on the accommodation market, but it’s hard to quantify exactly what the impact will be.”

How reliant are universities on international student fees?

International student fees are the second-largest source of income for tertiary institutions across the board, behind government funding. 

But some institutions are more dependent on it than others.

For example, Torrens University — a private provider in South Australia — received more than half its revenue from international student fees in 2022. One of Australia’s largest institutions, the University of Sydney, wasn’t far behind with 47 per cent of its revenue coming from international student fees. 

The University of Queensland (34 per cent), University of Melbourne (33 per cent), Monash University (31 per cent) and the University of New South Wales (31 per cent) rounded out the top six.

In total, international students paid $8.6 billion in fees that year — less than in pre-pandemic times, but still a pretty penny. 

According to Universities Australia chair David Lloyd, that income stream has allowed higher education providers to continue despite “a shortfall in government funding for research, teaching, and campus infrastructure”. 

“Every dollar from overseas students is reinvested back into Australia’s universities, having fewer students here will only widen the funding gap at a time universities need greater support,” he said.

And before the caps are even introduced, there are concerns the current debate is already leading prospective international students to look towards more welcoming countries for their study.

“The government is doing everything it can think of short of closing the industry down to try and reduce the number of students,” Professor Norton said.

“Certainly, there’s a very negative vibe.”