An alternative approach – setting student caps

As I mentioned in the webinar I co-hosted last week with Dirk Mulder and Tracy Harris – one option open to the government to pass their changes to the Education Services for Overseas Students Act (to introduce student caps) is to revise their methodology to fix the problems I identified and reallocate caps more fairly, and look to see if they can negotiate a compromise with the Opposition.

While I do not think there is much room for negotiation in the Senate this week to get the legislation passed, as I explained in the webinar, there are a number of other mechanisms available to the government which would enable them to set limits on the number of new international students different providers can enrol.

I have therefore modelled just one alternative approach for how the caps could have been allocated (assuming the same starting point – a total cap of ~270,000 for the whole sector in 2025) and focussed on what appear to have been both the government’s objectives, albeit not always explicitly stated, and the Coalition’s somewhat more explicit objectives (but these are my interpretations because neither party has been definitive about their objectives).

I have assumed there is an interest from both major parties in 2025 enrolments in publicly-funded universities and TAFE Institutes as follows (when starting with their 2024 enrolments):

• slowing growth/cutting new enrolments in some/all of the Group of Eight universities
• stabilising new enrolments in universities with their main campuses in the major CBDs
• allowing some growth in enrolments in suburban/outer-metropolitan universities (after numbers typically fell this year)
• allowing quite a lot of growth in enrolments in regional universities after numbers typically fell dramatically this year (although it should be noted that many international students studying with regional universities do so in CBD locations remote from the main university campus), and
• allowing some growth in enrolments in TAFE institutes after numbers typically fell this year.

There are different views across the two major parties on the merits of international students studying with private providers. The Coalition are more supportive, while the government has expressed concerns about providers which enrol more than 80% international students (noting, as above, that students studying in regional universities’ CBD campuses typically have the same experience of only studying with other international students).

So, correcting for the flaws I found in the government’s methodology (eg allocating caps to providers that have CRICOS approval but have not enrolled international students for six years), and choosing not to allocate caps to providers whose registration has been cancelled by the regulator – here’s just one way the caps could have been allocated, and the comparison with how they were allocated.

It delivers:

• more students to the university sector – with only 9 individual universities having a lower cap than the government proposed cap (some by only a few students)
• more students to private universities and non-university higher education providers than the government’s approach
• the same number of students to TAFE Institutes, and
• fewer overall students to the private VET sector BUT because I have fixed the methodological problems in the government’s approach only 55 existing RTOs would be worse off (and typically these are providers which commenced operations in 2023 and were given generous caps eg a provider which was granted initial registration in June 2023 and enrolled 127 students that year has been given a cap of 200 students in the government’s methodology – while another provider first registered in 2015 and which enrolled 437 students in 2023 was given a cap of 173 students for 2025 in the government’s methodology).

The approach I have taken gives:

• Group of Eight universities, private universities and NUHEPs: a -20% reduction on the number of new international students they enrolled this year
• universities in major capital cities: the same number of students they enrolled in 2024
• suburban universities and TAFE Institutes: the same number of students they enrolled in 2023 (a better year for most than 2024)
• regional universities: the generous caps derived through the government’s methodology except for FedU where I’ve allocated them a cap equal to their 2023 new enrolments (the government’s methodology was particularly punitive on FedU)
• established and compliant private VET providers: a -35% cut on 2023 new enrolments (even though this is a bigger reduction than for the other sectors and delivers fewer overall new students collectively to private RTOs, because I have addressed the methodological problems in the government’s approach and not allocated caps to seriously non-compliant providers, only 55 RTOs would be worse off).

A final note – as the government and Opposition contemplate what next in relation to setting caps for the sector – a crude approach like my alternative, while stronger than the government’s in terms of the integrity of the calculations and in not allocating caps to seriously non-compliant providers, it is still simplistic and still disadvantages some excellent universities and other institutions.

A more considered approach, as suggested by Western Sydney University in its supplementary submission to the Senate Committee inquiry would be a much more appropriate approach.

My intention in doing this alternative modelling is merely to show that a fairer approach, more aligned to government policy goals, is possible even without doing the extra work WSU and other universities and providers have quite rightly called for.

Western Sydney University (submission 111) suggested the Minister should set student caps by having regard to:

a) any integrity issues arising in regard to the recruitment of overseas students by the registered provider;

b) the availability of accommodation for overseas students at the registered provider; and

c) the extent to which overseas students at the registered provider address nationally identified skill shortages.

I could not agree more.