Overseas student intake to increase as universities face financial trouble

The Government has raised the student intake cap for struggling universities despite its promise to cut net migration, writes Dr Abul Rizvi.

THIS WEEK, THE GOVERNMENT announced it would adopt an overseas student National Planning Level (NPL) of 295,000 for 2026.

This is a 25,000 increase on the student "cap" of 270,000 the Government announced for 2025 as part of its now defunct student capping legislation.

This puts the cart before the horse because the Government has not explained how the 270,000 cap, let alone the new 295,000 NPL, fits within the Treasury’s current forecast for net migration. Nor has the Government explained how it will manage already surging demand for permanent migration, particularly from former overseas students.

The higher NPL is likely designed to placate universities’ demands for additional funding against the background of many universities facing deep financial troubles. A higher NPL enables the Government to avoid using taxpayer money to bail out universities. But rushing to placate universities, many of which have got themselves into financial troubles because of poor management, is not a substitute for good policymaking.

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Consistent with the Prime Minister’s promise to get net migration back to pre-pandemic levels, Treasury has forecast net migration in 2024-25 to fall to 335,000. We will not know if this reduction from net migration of over 445,000 in 2023-24 has been delivered until December 2025, when the preliminary estimate of net migration in 2024-25 is published.

To align with the Prime Minister’s promise, Treasury has forecast net migration then fall to 260,000 in 2025-26 and then around 230,000 from 2026-27 onwards. This steep decline in forecast net migration is largely based on a very large increase in departures, particularly departures of current and former students, to unprecedented levels.

While departures are increasing, we know that a very large portion of students are extending their stay by applying for further student visas. Many are stuck in the massive bridging visa backlog of well over 350,000, including around 40,000 appeals against onshore refusal decisions to the Administrative Review Tribunal. An increasing number are applying for asylum.

Almost 230,000 have moved onto temporary graduate visas. This level is also unprecedented. A large portion of temporary graduate visa holders are applying for temporary skilled visas. In the six months to December 2024, there was a 400% increase in temporary graduate visa holders securing temporary skilled visas.

Temporary skilled visa holders are the primary source of permanent employer-sponsored visas. The number of skilled temporary visa holders in Australia is now at a record 220,000.

There is also a large backlog of applications for permanent migration, both partner visas and various skill stream visas. The rapid increase in this backlog would have been driven to a significant degree by former overseas students. This is the inevitable third stage of a student visa boom.

It is against this background that the Government has still not announced the planning levels for the 2025-26 Migration Program. I suspect it has been presented with some politically and legally awful options by the Department of Home Affairs. But if the Government thinks it has some awful options for the 2025-26 Migration Program, under current policy settings, these will get worse for 2026-27 and beyond.

The 25,000 higher NPL for 2026 will only ramp up the pressure on both the permanent program and on net migration. Remember that at between 40% and 50%, students are by far the biggest component of net migration. Increasing that portion before determining if the promise made by the Prime Minister to get net migration down to pre-pandemic levels can be met is bizarre.

Treasury’s migration forecast looks shaky as long-term numbers set to surge

Despite Treasury’s forecast of a migration cooldown, policy settings suggest Australia’s population surge is far from over.

While the student contribution to the permanent program is smaller, that will inevitably rise as will the number of students and former students stuck in immigration limbo. The higher NPL makes managing that harder.

Treasury will, sometime later this year, advise the Government that it must increase its net migration forecasts as departures are not increasing fast enough and the Government has continued to announce new visa measures that will keep arrivals high. Based on my calculations, a long-term net migration forecast of 300,000 per annum is more plausible based on current policy settings.

And that is before Treasury has considered the impact on net migration of the higher NPL.

The Government should have considered these issues before rushing to placate universities. It has put the cart before the horse and now must work with that.

Dr Abul Rizvi is an Independent Australia columnist and a former Deputy Secretary of the Department of Immigration. You can follow Abul on Twitter @RizviAbul.