Australian universities appear saddled with de facto international enrolment caps, after Canberra signalled its intention to maintain a visa processing regime that imposes nebulous limits on overseas student recruitment.

University of Technology Sydney (UTS) vice-chancellor Andrew Parfitt said the new regime, known as ministerial direction 111 (MD111), had torpedoed his hopes of reviving the institution’s pre-Covid student composition.

The government introduced MD111 amid widespread dissatisfaction with the previous arrangement, ministerial direction 107, and after opposition parties blocked legislation that would have capped new overseas student numbers at each institution.

MD111 requires immigration officials to delay processing of visas for students enrolled with institutions that have reached 80 per cent of the quotas assigned under last year’s now defunct legislation.

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“We’ve hit our 80 per cent and it looks like processing is slower,” Parfitt said. “I think we’ll meet the budget number this year, but we won’t get [any] growth.”

UTS says its indicative cap of 4,800 new overseas students this year would have pegged its international share of enrolments at around 22 per cent, up from 20 per cent in 2024 but well below earlier figures. Foreign students comprised 25 per cent of the university’s enrolment load in 2023 and around 33 per cent before the pandemic, according to Education Department data.

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Parfitt said each international student brought in revenue of about A$35,000 (£17,000), and the difference between a 25 per cent and 30 per cent overseas share of enrolments equated to around A$70 million of institutional income.

Universities want the government to replace MD111 or revise the thresholds used for slowing down visa processing. But in an interview with newspaper, education minister Jason Clare offered no indications of change.

“Direction 111, as well as the increase in the visa fees to students, has helped us to reduce student visa applications by about 30 per cent this year, so that’s working,” Clare said. “I’m keeping a close eye on that.”

Parfitt said Julian Hill’s appointment to the newly created role of assistant minister for international education could help “open up a conversation” about changing the policy settings. Clare has pledged to “work closely” with Hill.

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But the UTS boss said international education’s ability to help fund the sector and “support Australia’s aspirations” would remain curtailed while policy was driven by perceived negatives, such as students’ impacts on housing.

“Every signal coming out of the new government is that the focus for this term is around productivity, economic activity and growth, and universities have a big role in that,” Parfitt said.

University of Newcastle vice-chancellor Alex Zelinsky said the government’s re-election offered an opportunity “to pursue proper policies that are in the national interest. Let’s get the facts,” Zelinsky said. “If students are causing problems of housing, let’s have a look where and when.

“There’s ways to deal with that. We should be encouraging universities to build more student accommodation. It’s affordable for our domestic students, it’s affordable for international students and it relieves the pressure on the local rental markets.”

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Zelinsky said that rather than specifying caps, the government should consider “rule of thumb” limits on overseas students’ shares of enrolments. This would allow universities to increase international recruitment when they admitted more domestic students.

He said a ratio of one foreign student for every three or four locals might be appropriate, although “one-to-two is probably too high”. Institutions that exceeded the ratio could “lose a bit of funding”, he said.

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john.ross@timeshighereducation.com