The Coalition will block the student caps bill. Brace yourself for more uncertainty over international students

In a surprise move, the Coalition has announced it will vote against Labor’s bill to cap international student numbers. This follows previous Coalition comments saying it would work with universities to “put a cap on foreign students”.

The Greens opposed caps from the start. Between them, the Coalition and the Greens have a Senate majority, which means the Albanese government’s plan to cap international students seems dead.

For universities, TAFEs, private colleges and potential international students, this news will be cause for relief, but not celebration.

There are multiple other measures still in place to reduce international student numbers. The Coalition has also previously committed to capping international student numbers in the major cities.

So while the Coalition has now opposed Labor’s student caps, it is not opposed to the idea of caps altogether.

What did the caps bill propose?

The proposed bill would have given the education minister wide powers to cap international student enrolments by education provider, campus and course.

For 2025, the caps would have applied to enrolments that were new to the education provider.

Apart from students in exempt categories (such as postgraduate research students), vocational and higher education providers would have been allocated 270,000 commencing enrolments between them.

Exemptions make it difficult to compare the proposed 2025 cap with previous years, but during a Senate hearing earlier this month, the government gave 323,000 commencing enrolments as a comparable 2023 figure.

Separate formulas were going to apply for international student places in public universities, private universities and non-university higher education providers as well as vocational education institutes. The impact of Labor’s caps would have been uneven. This includes a small overall cut for public universities compared to 2023, with bigger reductions for other education providers.

The Coalition has been critical of the bill

During Senate hearings into the bill, and in their subsequent comments in the Senate inquiry report, Liberal senators attacked the disproportionate effects of the proposed caps on private education providers.

For some, their financial viability would be threatened. The Coalition highlighted a pilot training academy that could not survive with its capped number of international students. It would have to break contracts with international airlines.

Vocational and higher education regulators also shared their concerns about the impact on providers’ finances.

Education providers going out of business would put pressure on the Tuition Protection Service. This is a government-run but education provider-funded scheme that finds new courses for students of failed education providers or pays refunds.

While affected international students eventually get a new course or their money back, provider collapses can cause them significant stress and delay.

What might the Coalition do instead?

The Coalition’s Senate inquiry report also gives some guidance about how they would approach caps if they won the 2025 federal election.

It singled out the “excessive number” of international students flowing into Australia’s most prestigious universities, especially in Sydney and Melbourne.

“We respectfully suggest”, their comments say, “a number of Group of Eight universities have lost sight of their core mission”. The Coalition says that core mission is providing Australian students with high value tertiary qualifications.

The Coalition favourably quoted Deakin University (not a Group of Eight member), which voluntarily capped international students at 35% of total enrolments. Deakin talked about “getting the balance right” between local and overseas students.

This approach may signal a future Coalition policy for capping public universities. It tackles total international student numbers – with their effect on Australia’s population and consequent pressures on accommodation and other services – and more specific concerns about the student experience when international students dominate classes.

The Coalition has also signalled it may restrict visas for the partners and children of students.

What will Labor do now?

Labor had said if the caps bill passed it would repeal “ministerial direction 107”, a decision by former Home Affairs Minister Clare O'Neil in December 2023 on the processing of student visa applications. Now this repeal will not happen.

Ministerial direction 107 repurposed an existing risk rating, which determined how much evidence must be provided with a student visa application. Under the direction, visa applications for students from low-risk providers – whose students have low rates of visa refusals or cancellations or subsequent overstays in Australia – received visa processing priority. In practice, ministerial direction 107 favoured the more prestigious universities.

Ministerial direction 107 is widely hated by international education providers. They blame it for student numbers and revenues falling in 2024.

While the direction undoubtedly delays visa processing for higher-risk providers, its effects are conflated with the multiple other changes to visa policy since late 2023.

Ending ministerial direction 107 would still leave in place changes such as student visa applicants needing to prove a higher financial capacity, increased English language requirements, more than doubling the non-refundable visa application fee, and restrictions on onshore student visa applications.

The government could also reduce the total resources it devotes to processing student visas, which would slow the inflow of students for all providers. As my analysis shows the number of visas processed between January and August 2024 (including both grants and rejections) were only 5% lower than pre-COVID in 2019. This could be cut further.

Labor also has unfinished business on the incentives for international students to choose Australia. For nearly a year it has been foreshadowing changes to the permanent migration system that would remove points categories international students have relied on. This could include points for studying in a regional area, for undertaking professional development years and perhaps points for studying in Australia. This would be a blow to demand from migration-sensitive source countries, such as India and Nepal.

The political troubles of international education are not over

Given the Coalition’s previous statements on international student caps, their current position is a surprise.

But it does not change their overall policy goal of restricting international student numbers. They could cap enrolments in a different way. Labor has not completed its announced reforms to international education and may find other ways to reduce student numbers.

There is more to come in international education policy, whichever party wins the 2025 federal election.