Författare: Andrew Norton Professor in the Practice of Higher Education

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.

Education Minister Jason Clare has been trying to get parliamentary approval for his bill to introduce international student caps.
Mick Tsikas/AAP

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 affect 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.

Coalition education spokesperson Sarah Henderson says the government’s bill is ‘chaotic and confused’.
Mick Tsikas/AAP

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. Läs mer…

Over the weekend, the Albanese government announced radical changes to student loans, which would kick in after the next federal election.

Three million Australians with student debt could see their balances cut by 20%. The remaining debt would be repaid under a new system, with no compulsory repayments for people earning less than A$67,000 a year. Both changes require parliamentary approval.

The changes will apply to everyone with a student debt, including all HELP (formerly HECS), vocational education and Australian apprenticeship support loans, as well as other student support loans.

People with student debt would undoubtedly benefit from the proposed changes. But they come with a hefty price tag and some disadvantages.

What are the proposed cuts to student debt?

As of June 30 this year, Australia’s higher education student debt totalled about $75.1 billion – although this is soon set to drop by about $3 billion. Legislation to partially reverse recent indexation to debts will go to the Senate later this month.

However, staying with the $75 billion, a 20% cut would be about $15 billion.

Using the government’s figures, someone with the average HELP debt of $27,600 would see around $5,520 cut from their HELP loans next year.

Vocational education students owed $8.4 billion as of June 30 2024. Their balances would reduce by about $1.7 billion under the changes.

Based on previous student support loan data, this debt is more than $3 billion. The changes would see it drop by about $600 million.

These reductions total $17.3 billion compared to the government’s estimate of $16 billion. But the upcoming indexation changes may explain this difference.

Repayments set to change

These changes have two important elements: the income at which repayments start and how repayments are calculated.

These changes come amid a cost-of-living crisis and rising fees for students.

There was a noted outcry earlier this year when the cost of an arts degree hit $50,000 for 2025.

No compulsory repayments if you earn under $67,000

With parliament’s approval, for 2025-26 compulsory repayments on student loans would not start until the debtor was earning $67,000. This is up from about $56,000.

This would help a significant number of Australians. In 2023-24 more than 400,000 debtors had incomes between $50,000 and $70,000.

Changes to how repayments are calculated

Another significant change is to how repayments are calculated. Currently, when a debtor’s income reaches one of 18 income levels they repay a higher percentage, based on all their income.

This can produce strange results. Take a graduate earning $62,850 a year. They are in the 1% of income repayment rate, so they owe the Australian Taxation Office $628.50 in HELP repayments. But if their income goes up by $1 to $62,851 they enter the 2% repayment bracket, and owe the tax office $1,257. So a $1 pay increase would reduce the graduate’s take home pay by more than $600.

Under the government’s proposal, repayments would be calculated on income above a threshold, ignoring all income below the first threshold.

The new system would start with a 15% repayment rate at incomes between $67,000 and $124,999. Income at $125,000 or above would have a 17% repayment rate.

So, take a graduate on $70,000 a year. Under the current system, they will repay 2.5% of all their income, which is $1,750. Under the proposed system their repayments will be calculated only on the $3,000 difference between $67,000 and $70,000. This means they pay 15% of $3,000 or $450.

The government says on average, repayments will drop by $680 per individual debtor.

But those earning $180,000 plus will repay more student debt each year due to the new system. This is not a large group.
Of the 1.16 million people who made a HELP repayment in 2021-22, all but 16,000 earned less than $180,000.

The cost of an arts degree is set to reach $50,000 in 2025, amid growing concerns over study costs.
rongyiquan/Shutterstock

There are some disadvantages

The downside of reduced annual repayments is longer repayment periods and more indexation of HELP balances.

People who want to repay more quickly can make voluntary repayments, which have increased significantly in recent years. But most people take the default option of compulsory repayments only.

While people who currently hold debt will see their repayment times reduced after the 20% cut to their balance, future borrowers won’t have this benefit.

Given the pattern of recent announcements, it would not be surprising if the government also announced reduced student contributions for future borrowers.

But it is also surprising the government has been stalling for two years on the high cost of arts degrees, set to hit almost $17,000 a year next year. These high fees should have been reduced long ago.

The cost to government

The 20% reduction in student debt balances will also come at a very significant cost to government and taxpayers.

This will not be the full $16 billion they have announced, since that includes debt that is not expected to be repaid anyway.

For higher education debt, the government actuary estimates 24% of the debt outstanding as of June 30 this year will not be repaid. Even so, a 20% cut to the $57.1 billion “good” debt would still cost $11.4 billion.

Cutting vocational education debt by 20% would add around another $1 billion to the cost, after deducting debt that won’t be repaid. Debts for student income support tend to have high bad debt rates, but the 20% cut for them would also add to the government’s expenditure.

The government will also incur further costs from slowing down future repayments.

Is this the best way?

The last few years have highlighted how stressful and damaging high levels of student debt can be for younger Australians.

And as Labor looks ahead to the next federal poll, reducing individuals’ debts and repayments could be a useful election selling point.

However, the Albanese govenrment’s plan comes with a high price tag and the priorities may not be entirely right. Managing future debt, such as by reversing fee hikes under the Job-ready Graduates program, is as important as reducing old debt. Läs mer…