Australian universities are filling only about two-thirds of their allocated international student places on average. The shortfall is already forcing job cuts and restructuring, while universities warn domestic students will pay the price. Department of Education figures from October show that just five public universities have passed 80% of capacity, and every one is in a capital city.
Regional institutions carry the heaviest load. Mike Ferguson, pro vice-chancellor of international students at Charles Sturt University, which runs campuses across regional New South Wales, said the university filled 40% of its cap this year. “At the moment, we're around 35% down on where we were last year, and we had expected to grow from last year,” he said. “Currently we only have 20% of the international student volume we had prior to the pandemic.” Charles Sturt puts the gap between pre-Covid recruitment and today at $35m. It has announced job cuts and restructuring.
Who Pays the Price
Ferguson pointed to government policy: a visa application fee raised to $2,500, high refusal rates, and uncertainty stirred up by announcements from the Coalition and One Nation targeting international students. Regional universities mostly recruit from south Asian countries, where visa refusal rates sit around 53%. “It's not only resulting in us losing what we believe to be largely genuine students ... but it's also creating a large deterrent from new students to come in and apply, knowing they're having to pay world record visa fees with only a one in two chance of actually getting a visa,” he said.
He added that the university backs Labor's crackdown on onshore student transfers and visa hopping, which aims to improve the integrity of the system.
The damage reaches beyond regional campuses. Prof Andrew Norton, a higher education expert, said falling numbers hit every public university because institutions use international student fees to cross-subsidise teaching and research. “It creates massive problems because international students are basically the only profitable aspect of university operations,” he said.
Western Sydney University vice-chancellor George Williams said his institution has also seen significant declines. He warned that the resulting deficits could reach domestic students. “It has an enormous impact on our budget and it means universities across the sector are asking where they can save money, where they can pull back,” Williams said. “In our case, international students heavily subsidise domestic students, and it puts real pressure on the services we can offer to domestic students.” He said the heated political debate was deterring prospective students and “would lead people to wonder whether they would be welcome in Australia”.
Adelaide University told the ABC in September that it had reached 60% of its international student capacity following its merger with the University of South Australia, creating a potential $90m revenue shortfall. The government's 2026 planning level for international students was 295,000, but numbers are tracking toward 250,000, just above the Coalition's proposed level of 240,000. Labor will cut the number of international students eligible to bring family while studying. The Coalition has promised to abolish temporary graduate visas.
Skills Shortages in the Regions
Duncan Bentley, vice-chancellor of Federation University in regional Victoria, said his university faces significant pressure because far fewer international students enrolled this year. Federation University has urged the government to create a special regional skills student visa, prioritising students in critical fields such as allied health or teaching. “We endorse, and have been asking for a long time for, the 12-month ban on course hopping, apart from exceptional and genuine circumstances,” Bentley said. He said the visa should be open to any overseas student studying a course on a regional skills shortage list, “based on the premise that domestic regional graduates can't meet the demand”.
Phil Honeywood, chief executive of the International Education Association of Australia, warned of knock-on effects. “The high non-refundable visa cost makes the system more like a lottery ticket,” he said. “There's not enough nurses, childcare workers, aged care workers or engineers in regional communities ... so basically if you have diminishing numbers of international students in these regional areas and they're not able to stay past their degrees, that creates a cascading skill shortage.”
Victoria's Election Pitch on Skills and Regions
In Victoria, where the state election is scheduled for November 28, the parties are pitching to regional and trades-minded voters. Opposition Leader Jess Wilson proposed 10 new technical colleges statewide under a Coalition government, adopting a South Australian model. The colleges would enrol students full time from years 10 to 12, unlike Labor's Tech Schools. The Coalition estimated the plan would cost $222 million over eight years and educate a cumulative 5,000 students in plumbing, electrical work, carpentry, healthcare and hospitality. “My team is backing the next generation of tradies to get the skills they need sooner for a rewarding career,” Wilson said, adding that “not every student thrives in a traditional classroom, and not every young person wants to go to university.”
The Coalition described current tech schools as “drop-in centres offering short-term experiences but no vocational qualifications.” Yet more than a dozen such training centres have opened across Victoria over the past decade, and Frankston Tech School opened in 2025. The model traces back to a pledge made 12 years ago, ahead of the 2014 state election, by then-opposition leader Dan Andrews. It followed generations in which Victoria's secondary system was split between academic high schools and vocational technical schools, until the Cain government merged them into amalgamated colleges in the late 1980s under then-education minister Joan Kirner.
Premier Ben Carroll pledged that a re-elected Labor government would direct 100% of mineral resource royalties into regional Victoria, borrowing from Western Australia's “royalties for regions” policy. He said Labor would “guarantee every cent” was reinvested in regional infrastructure, including schools and hospitals, and estimated the state's minerals endowment could generate $500 million over the next four years. “If the wealth comes out of regional Victoria, the wealth should go back into regional Victoria — it's that simple,” Carroll said. The original WA policy was driven by then-WA Nationals leader Brendon Grylls in exchange for backing then-Liberal leader Colin Barnett as premier after the deadlocked 2008 election, 18 years ago.
Separately, the Australian Financial Review reported that a record number of students raced to secure university offers before HSC exams began the following week, amid fears of “grade inflation.”
Why This Matters:
The international student slump is a funding problem dressed up as an immigration debate. Universities have relied on international fees to cover teaching and research, so when visa costs climb to $2,500 and refusal rates run near 53% for south Asian applicants, the shortfall lands on campuses and their students. Williams warned domestic students could lose services. Regional communities face another squeeze: Honeywood says fewer graduates staying on could deepen shortages of nurses, aged care and childcare workers. With a state election weeks away, competing promises on royalties and technical colleges show regional investment is on the ballot. None resolves how universities will be funded if the current visa settings stay in place.