Why offshore student visa grants in 2025 must rise to hit student caps

The recently announced student visa caps have not only caused hysteria in the media but proven to be a poor policy instrument for the Government, writes Dr Abul Rizvi.

THERE IS MUCH hysteria about the student visa caps recently announced by the Department of Education, including claims that these may trigger a recession. While the caps are undoubtedly a poor policy instrument, the hysteria appears to be based on the view that the caps will lead to a reduction in the stock of students in Australia.

It’s important to note the 2025 caps apply to the flow of new students into the higher education and vocational education and training (VET) sectors and don’t impact existing students in 2024 who remain with the same provider in 2025. That would be a substantial portion of the 399,427 enrolled in a higher education course at end May 2024, a number that likely increased in July 2024 due to the large inflow of new mainly higher education students in that month.

If the caps are met, the number of commencements in the higher education sector in 2025 will exceed completions assuming each higher education course runs on average for two to four years. The stock of VET students may fall if VET providers are unable to recruit sufficient students who initially entered based on a higher education course or due to a range of measures to tighten onshore student visa policy in 2024.

Government rationale for student visa caps revealed

The recent announcement of student visa cap numbers highlights the power play between the Education and Immigration departments.

Not only will the stock of students in Australia continue to rise in 2025 if the caps are met but the Department of Home Affairs (DHA) will likely need to find a way to increase the offshore student application and grant rate to get to the caps. That may be the purpose of the Minister for Education’s call for the Immigration Minister’s Direction 107 to be replaced.

That will surprise many so let’s go through the numbers.

The proposed higher education cap for 2025 is 175,000 (not including post-graduate research students but including private higher education institutions) while the VET cap is 90,000. This compares to 154,660 new higher education commencements in 2023 and 81,643 new VET commencements in 2023.

(Data source: AEI; data.gov.au. (1) It is possible that post-graduate commencements are counted as part of higher education commencements. (2) Also note new students are those who commence any course in Australia for the first time. Those who commence their second or third course are not included.)

But why are the caps for 2025 so much higher than new commencements in 2023 (which was itself the highest new commencements year on record beating the 2022 record of 93,510 new commencements in the higher education sector and 49,311 new commencements in the VET sector)?

The answer lies in a combination of:

Different treatment of data between the DHA and the Department of Education (DoE). When a student receives a visa for a package of courses – say, English and higher education – DHA counts that as a visa for the higher education sector while DoE counts that as an English language commencement. This explains why offshore visa grants for the English language courses (ELICOS) sector are so low compared to student commencements for ELICOS (see Table 1).
The new student cap includes people who after initial commencement, change:
- to another higher education or VET provider; or
- from, say, ELICOS to higher education or VET; or
- commence with a higher education or VET provider after entering Australia on another visa. Note people who enter Australia on a visitor visa are not allowed to apply for an onshore student visa after 1 July 2024.

Student cap hysteria overblown

Dr Abul Rizvi analyses the Government's new student visa caps and whether these will adequately address issues of sustainable growth, skill shortages and strengthening integrity.

Higher education

In 2023, there were 154,660 new higher education commencements. It is not clear if these include around 6,000 post-graduate by research commencements but let’s assume they don’t.

To this, we need to add students who may transfer to higher education after commencing in another sector.

In 2023, there were:

2,729 students who transferred from VET to higher education;
1,725 students who transferred from schools to higher education; and
835 students who transferred from ELICOS to higher education (this would not include students who did their English language studies or foundation courses as part of the higher education institution they were attending).

That gives a total of 5,289 higher education commencements in 2013 who transferred from another non-higher education provider. In addition, 2,611 people on visitor visas secured onshore student visas for the higher education sector. This will not be possible in 2025.

The two figures we don’t have a handle on are:

students who transferred from one higher education provider to another (it is likely this figure is relatively small); and
students who first did an ELICOS or non-award course as part of a package and then transferred to higher education (this is likely to be a more substantial figure).

But would that be sufficient to offset the difference between the 2023 new higher education commencements figure of 154,660 and the higher education cap of 175,000? It most likely would but not to a significant degree.

We then need to consider the current rate of offshore visa applications and grants in higher education. Primary offshore visa grants in 2024 for the higher education sector are running well below the level for 2023. To end July 2023, there were 132,402 primary offshore student visa grants compared to 98,436 to end July 2024. This gap of around 34,000 visas is likely to widen during the rest of 2024 unless there is substantial visa policy change (such as the replacement of the two main Ministerial Directions on student visas).

It is thus quite possible that the overall higher education cap may not be reached due to current student visa policy settings. Hence the Education Minister’s desire for the Immigration Minister’s directions on visa processing to be replaced.

VET

The VET cap is 90,000 in 2025 compared to new VET commencements in 2023 of 81,643 (which itself was an extraordinary all-time record). To the estimated new commencements, we need to add students who may transfer to VET after commencing in another sector.

In 2023, there were:

14,410 students who transferred from ELICOS to VET;
9,704 students who transferred from higher education to VET; and
334 students who transferred from school to VET.

That gives a total of 24,448 VET students in 2023 who transferred from another non-VET education provider. In addition, 8,707 people on visitor visas secured onshore student visas for the VET sector. This will not be possible in 2025.

Capping student visas to curb net migration could create chaos

There has been much discussion in the media that the Government will cap student visas to bring down net migration to 250,000 in 2024-25.

The two VET figures we don’t have a handle on are:

students who transferred from one VET provider to another (it is likely this figure is relatively small); and
students who first did an ELICOS or non-award course as part of a package and then transferred to VET (this is also unlikely to be a substantial figure as VET package courses are comparatively few).

The challenge with meeting the VET cap of 90,000 is that:

primary offshore VET student visa grants have fallen dramatically from 22,342 in the first seven months of 2023 to 5,984 in the same period of 2024;
people on visitor visas can no longer secure a student visa — something the VET sector was heavily reliant on to avoid offshore scrutiny;
the VET sector is heavily reliant on onshore student visa grants by recruiting from the higher education sector but policy on this has been significantly tightened; and
higher education providers will be much more wary of VET providers poaching their students given that the place of the leaving student will not be replaced in the year the student leaves.

Another figure we don’t have a handle on is the sector break up of temporary graduates who returned to a student visa. In 2022-23, 10,102 temporary graduates went back to a student visa. It is most likely they went back to a VET course given the higher portion of onshore student applications to that sector. Note that in the six months to December 2023, no temporary graduates went back to a student visa as regulations prevented this. This is another source of students that was available in part of 2023 but will not be available in 2025.

It is also relevant that most of the 150,000 people who moved to a COVID visa have by now applied for a student visa if that is what they selected. This will be another source of students that will not be available in 2025.

Unless there is a dramatic change in student visa policy settings, it is highly unlikely the 90,000 cap on the VET sector will get even close to being met.

Conclusion

Apart from the fact student caps are a fundamentally poor policy instrument, there are three main conclusions to be drawn from the sector cap levels that have been announced:

Without substantial change to visa policy settings, the caps at the sector level are most likely redundant.
If the caps were to be hit, the Government would be highly unlikely to reduce net migration to the levels forecast, let alone the levels announced by the Coalition.
The problems caused by the sudden surge in students in 2022-23 in terms of students and temporary graduates left in immigration limbo would be even bigger if the caps are met.

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.