Economics Analysis

Nepal emerges as Australia's leading source for overseas students

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Australia has seen a surge in applications for student visas from Nepal (Image via Pexels)

A recent spike in student applications from Nepal comes with a risk of students being left in immigration limbo, writes Dr Abul Rizvi.

OVER THE LAST 30 years, overseas students have been the key driver of immigration levels.

As we move from negative net migration in 2021 to a forecasted long-term net migration of 235,000 per annum by 2024 (see Chart 1), it will be overseas students who will largely determine if this is delivered. But how this is delivered is just as important as the level of immigration.

(Source: ABS Migration, 2021 Budget Paper No. 3)

The student contribution to net migration fell sharply into negative territory after the Global Financial Crisis (see Chart 2) and then increased after the implementation of recommendations of the Knight Review from 2012-13.

(Source: ABS Migration)

From 2014-15, students represented over 40% of net overseas migration and as high as 47% in 2018-19 before falling back again during the pandemic.

While final net overseas migration figures for 2021 are not yet available, during the pandemic the student contribution to net overseas migration fell deep into negative territory as more students left than arrived. As a result, the stock of student visa holders in Australia fell sharply (see Chart 3).

(Source: data.gov.au, temporary visa holders; doesn’t include bridging visa holders)

The stock reached a low of 315,949 at end December 2021 after peaking at 633,186 in September 2019. Note, however, that there is a significant number of students in the very large bridging visa backlog which at end March 2022, stood at over 373,000 — an all-time record.

Students are a key contributor to permanent migration, particularly skilled migration (see Table 1).

(Source: data.gov.au, migration)

Note that the two new regional visas from 2019 replaced the former skilled regional visa. In addition, changes to employer sponsored policy, reduced places for skilled independents and changes to the way state/territory nominated visas are defined, effectively transferred grants to the new Global Talent Independent visa and the new regional visa.   

The large increase in students securing partner visas in 2020-21 was due to backlog clearance after partner visa places had been (unlawfully) restricted for a number of years.

Tightening of pathways for students to permanent migration has led to steady growth in the stock of students on temporary graduate visas (see Chart 4). Note Chart 4 also does not include a significant number of temporary graduate visa holders who are in the very large bridging visa backlog.

(Source: data.gov.au, temporary visa holders; doesn’t include bridging visa holders)

Many of these temporary graduate visa holders are effectively in immigration limbo having been in Australia for many years but unable to secure a pathway to permanent residence.

This is a poor public policy outcome, partly due to a failure to guide students into courses that reflect Australia’s long-term skill needs and partly due to students undertaking cheap courses in low-quality institutions as a means of maintaining their lawful visa status but with only limited pathways to permanent residence.

International borders re-open — the emergence of Nepal

With international borders re-opening, we have seen a strong rise in offshore student applications (see Chart 5). Offshore student visa applications increased from 5,387 in October 2021; 11,406 in November 2021; 20,532 in December 2021; 25,417 in January 2022; 27,183 in February 2022 and 27,198 in March 2022.

Note that offshore student applications usually decline in March and April while peaking in January. The strong performance in March 2022 is contrary to the standard fluctuations.

(Source: data.gov.au, students)

The most interesting development in March 2022 was the increase in offshore student visa applications from Nepalese students. In March 2022, there were 4,788 offshore student applications from Nepal compared to 3,930 from China and 3,483 from India.

The key risk will be if the strong demand from Nepal is a response to the unlimited work rights now available to those on Australian student visas compared to our main competitors. If that is the case, we may see large numbers of Nepalese students switching from tier one Australian education providers to tier two and three providers who offer cheaper courses, less pressure on studying and more freedom to work in multiple jobs.

That would leave more Nepalese students in immigration limbo (unable to secure a skilled job using their qualifications and unable to find a pathway to permanent residence).

Approval rates for offshore student applications in March 2022 were 91.8% for Nepal but 65.5% for India and 73.4% for Pakistan.

For the past five months, the approval rate for Nepalese students has been significantly higher than for students from India and Pakistan. Whether this reflects a change in recruitment strategy by Australian education providers; policy instructions from Canberra or is simply a reflection of localised factors is not clear.

For example, it could simply be a different application of the “Genuine Temporary Entrant” requirement by local DHA staff.

The April to July data may tell us more.

While offshore student visa applications have just about caught up to pre-pandemic levels, student arrivals continue to lag (see Chart 6). Many of the current offshore student applications and visa grants may arrive ahead of the next semester.

(Source: ABS Arrivals and Departures)

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.

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