The Headlines
Closed doors?
As countries put limits on the inflow of international students, we explore the reasons why and the implications of such shifts.
By Seb Murray
The student cap in Canada also comes amid mounting pressure on the government to tackle housing affordability.
The (worrying) trend of capping international students in higher education institutions is becoming increasingly common across the globe.
Australia and Canada, two of the most popular destinations for international students, have recently announced or started implementing caps on the number of foreign students on their shores. This phenomenon is not isolated; countries like Singapore for example announced limits in 2011 on international student populations. Immigration policies often influence decisions on international student caps. Political pressures and public opinion on immigration can lead governments to impose limits to address concerns about population growth and job competition.
For instance, Australia’s government aims to cut net annual migration to 260,000 by 2025. It’s focusing attention on international students, following a sharp increase from approximately 580,000 before the pandemic to 700,000 by February last year.
Low housing supply is also a concern in Australia. Indeed, one of the primary reasons for capping international students, in any country, is the strain on local resources and infrastructure. But a recent report released by Australia’s Student Accommodation Council said foreign students had been “unfairly blamed” for the country’s rental crisis.
The analysis shows that “an increasing number will need to make significant changes to their funding model in the near future to avoid facing a material risk of closure”.
The report argued that rents began increasing in 2020, even without international student migration. Between 2019 and 2023, median weekly rent rose by 30 percent, while student visa arrivals decreased by 13 percent during the same period.
“International students have been unfairly blamed for the rental crisis, yet this report shows that long-term structural issues in Australia’s housing market are the real cause for rental pressures,” says Torie Brown, Executive Director of the Student Accommodation Council.
Still, critics argue that universities around the globe often face challenges in providing adequate facilities for a growing number of students. An influx of international scholars can lead to overcrowded classrooms and stretch faculty resources, they argue.
This can affect the quality of education and the experience for both domestic and international students.
“It’s unacceptable that some private institutions have taken advantage of international students by operating under-resourced campuses, lacking support for students and charging high tuition fees, all while significantly increasing their intake of international students,” Canada’s Immigration Minister, Marc Miller, said in January, when he announced the foreign student cap.
“It’s unacceptable that some private institutions have taken advantage of international students by operating under-resourced campuses, lacking support for students and charging high tuition fees, all while significantly increasing their intake of international students,” Canada’s Immigration Minister, Marc Miller, said in January, when he announced the foreign student cap.
Canada now plans to approve only 360,000 undergraduate study permits this year, a 35 percent reduction. In 2022, the country hosted more than 800,000 foreign students overall, up from 214,000 a decade earlier. Miller said the new measures aim to ensure that future students receive the “quality of education they signed up for”.
However, the student cap also comes amid mounting pressure on the Canadian government to tackle housing affordability; rents have increased by 22 percent over the past two years, with some economists linking the issue to a surge in immigration.
This rhetoric represents a shift, as Canada has long relied on open immigration to support its shrinking domestic workforce, achieving some success. International students alone contribute about C$22 billion annually to the Canadian economy. Australia faces a similar situation, with foreign students contributing A$48 billion to the domestic economy in 2023.
However, there are concerns about the sustainability of relying heavily on this revenue stream. During the COVID-19 pandemic, many universities globally faced financial difficulties due to reduced international student enrolments.
Governments and universities are now more cautious, seeking a more balanced and stable financial model. In the UK, universities have described the current funding model for higher education as “broken”. They want the government to review the tuition fee system, which has been capped at around £9,000 per domestic student for over a decade.
But the UK’s recently announced limits on overseas students – not a cap but curbs on bringing family members – present their own major risk to universities’ financial stability.
Around the world, international students typically pay higher tuition fees than domestic students, providing a significant revenue stream for universities. Caps will lead to reduced income, necessitating budget adjustments and potential cuts in degree programs and services.
In a recent report, the Office for Students, the UK’s sector regulator, said nearly two-thirds of universities in England could be in deficit by 2026-27, with 40 percent facing low liquidity much sooner.
The analysis shows that “an increasing number will need to make significant changes to their funding model in the near future to avoid facing a material risk of closure”, says Susan Lapworth, CEO of the OfS.
Beyond the income from their fees, international students bring diverse perspectives, enriching the academic environment and fostering global awareness among all students. Caps may limit this diversity, impacting the cultural and educational experience on campus around the world.
Moreover, a strong international presence can enhance a university’s global reputation and improve its ranking. Caps might affect a university’s ability to attract top talent from around the world, potentially impacting its standing in international league tables.
But the financial impact is most concerning to universities. One option that’s been floated is that universities can intensify efforts to attract domestic students to compensate for the cap on international enrolments – say through outreach programs, scholarships and partnerships with local schools.
However, with international students often paying higher fees and state funding for higher education often capped, it’s not clear if diversification will solve that problem.
Many universities have a high exposure to international students: in 2022, they exceeded 40 percent of the total student population at many Australian institutions.
Another thing to explore would be alternative revenue sources, such as online courses, executive education programs, research grants and lifelong learning opportunities. Reducing reliance on international student fees can ultimately create a more resilient financial model.
Enhancing support services for international students can also improve retention and satisfaction, making universities more attractive despite caps. This includes academic support, cultural integration programs and career services.
Moreover, universities can collaborate with representative bodies such as the International Education Association of Australia (IEAA), the Canadian Bureau for International Education (CBIE), and Universities UK International (UUKi) to advocate for policies that consider the benefits of international students and seek more flexible approaches to caps.
Universities Australia CEO Luke Sheehy tells QS Insights Magazine: “Australia’s universities are calling for certainty and stability moving forward on any changes to international education policy. The government has reinforced its commitment to working with us to co-design the mechanisms needed to drive sustainable growth.
“We’ll be looking closely at the unintended consequences of caps on international students in other countries. We have worked hard to build an international education system that delivers economically and socially for our nation – and we should be striving to build on that success for the benefit of all Australians.”
The practice of capping international students is not new. Singapore implemented a cap of 15 percent as long ago as 2011, to balance the benefits of internationalisation with the need to prioritize local students.
In Singapore, concerns arose because international students often receive generous scholarships and subsidies, unlike in many other countries where they pay higher fees and support university finances. The government pledged more scholarships and bursaries for local students.
Today, the trend of capping international students around the world reflects a more complex mixture of economic, social and political factors. While it poses challenges for universities, it also offers an opportunity to rethink and innovate their approaches to education and financial sustainability.