2025 is certain to be a telling year for Australia’s international education sector. It marks the first calendar year of Australia’s new visa processing directive (MD111), which manages the ‘soft caps’ on international student commencements implemented by the National Planning Levels (NPL). While similar cap policies in Canada have resulted in significant reductions in student demand, Australia has—so far—better weathered these systemic changes.
Back in February, we predicted that Australia would experience a 10% decline in new student visas granted in 2024/25. With full fiscal year data now available,1 we can see just how close our projections were: granted visas actually dropped 12% year-over-year.2 Yet, these declines are in line with the intention of the government’s directive, lowering incoming international student volumes to match pre-pandemic levels and refocusing students toward Australian universities.
Today, we’ll take a closer look at the early impacts of Australia’s MD111 by diving into 2024/25 student visa data. We’ll explore how student demand for studying in Australia has changed and which student populations are growing within these cap limitations. Additionally, we’ll detail why planning for continued cap impacts on student demand will be critical for Australian institutions in 2026 and beyond.
Key Insights at a Glance
- Nearly 230,000 Australian student visa applications were lodged by primary offshore applicants in 2024/25, a near 30% decline from 2023/24.
- As a result of Australia’s international student caps—which prioritize student volumes toward Australian universities—students applying to higher ed accounted for nearly 75% of all new visas granted in 2024/25.
- Visas granted for VET and ELICOS programs dropped 50% year-over-year.
- Steady and rising interest from students across Asia present a strong opportunity for Australian tertiary institutions to reach their cap allocations..
Demand for Australian Student Visas Returns to Pre-Pandemic Levels
Throughout 2024, the Australian government debated and discussed legislation to limit the number of new international students beginning programs within the country each year. While the legislation that proposed more formal caps was ultimately scrapped, the new student limits outlined in the National Planning Level (NPL) were maintained. Through the NPL, indicative allocations were assigned to each university and VET provider for 2025, and student visa processing was prioritized according to MD111.
These changes—as with any major mobility barriers impacting international students—were intended to dampen overall demand. In fact, the Australian government’s stated goal was to manage growth and sustainability by capping at pre-pandemic levels, setting the overall 2025 NPL target based on 2019 figures.
Based on student visa volumes for the 2024/25 fiscal year, early indications are that student demand has softened in line with these governmental targets:
Due to a “double cohort” effect—where students who delayed studying during the pandemic moved forward with their plans in subsequent years—Australia’s international education sector experienced a surge of student interest in 2022/23. Since then, student interest has returned to near pre-pandemic levels, resulting in year-over-year declines.
Granted student visa figures reached just over 210,000 in 2024/25, dropping by 12% compared to the previous year. By contrast, new visa applications lodged fell to around 230,000, down nearly 30% compared to 2023/24. Given that both figures were within less than 2% of 2017/18, early signs indicate that MD111 is functioning as intended to normalize visa volumes.
How Australia’s Student Caps Compare on the Global Stage
The greater decline in visas lodged could signal weakening beyond the intention of Australia’s caps. However, we don’t anticipate that Australia will experience the same level of student interest weakening that Canada has since their cap implementation in 2024. Through the first six months of Australia’s international student cap in 2025, new visas lodged fell by 18% year-over-year. During the first six months of Canada’s caps in 2024, new visas lodged dropped by 48% compared to the same period in 2023.3
Australia’s education sector better weathered the more restrictive policies on student mobility because the NPL and MD111 are more targeted than the Canadian equivalent.Indeed, the Australian government decided on specific institutional cap levels and promised faster visa processing. Additionally, Australia experienced more limited student population growth post-pandemic.
As a result, we anticipate that 2024/25 will be a ‘reset’ year for Australia’s international education sector, with student volumes returning to their modest pre-pandemic growth trend. Yet, any further reductions in student demand in 2025/26, or a significant shift in visa grant rates, could jeopardize the ability of Australian universities and VET providers to reach their allocations. For Australian institutions, this means it’s vital to reinforce and expand diversification efforts, mitigating the potential impacts of a downturn from any one student population.
Australian Universities Account for Majority of New Student Visas
MD111 and the NLP set allocations for both universities and VET providers, although the majority of allocations were assigned to Australian universities. This allocation balance reinforces a trend that has evolved since 2022/23: international student demand in Australia is increasingly focused on higher ed.
In 2022/23, higher ed accounted for around 60% of all student visas granted to primary offshore applicants. However, in 2024/25, this proportion had shifted to nearly 75%:
While visas granted for studies at higher ed institutions have remained fairly stable over the past three years, the number of international students pursuing ELICOS and VET studies have fallen sharply. Due in part to increased visa fees, higher financial requirements, and the impact of MD107,4 student demand has shifted away from shorter courses in Australia. Many students from Latin America and other key emerging regions have traditionally favoured shorter study options. As Australia sees reduced demand for programs like VET and ELICOS, these student populations are enrolling elsewhere, leading to a less diverse international student mix in Australia as a whole.
Australian Government States Institutions On Track to Reach 2025 Allocations
Australia’s 2025 NPL allocations were set according to new international student commencements per calendar year, not based on student visa volumes per fiscal year.5 As such, it is still early to evaluate the relative success of Australia’s indicative allocations. Yet initial signs indicate that many institutions—especially universities—are on track to reach their 2025 targets.
The Australian Department of Education recently stated that as of August 1, 2025, the pipeline of indicative students (including students who have yet to begin their studies) is at 96% of the total National Planning Levels. Of Australia’s 38 public universities, 26 had already reached 80% of their total allocation, aligning with the visa prioritisation threshold implemented in MD111. By contrast, only 153 of Australia’s 977 VET providers had achieved the same threshold:6
Although the apparent challenges for VET institutions should not be overlooked, Australia’s international sector experience with international student caps thus far may result in a marked difference from Canada’s. And, vitally, it may demonstrate that balancing stability and growth is possible through limited and targeted legislative measures.
Australia’s 2026 National Planning Levels Include Focus on Southeast Asia
Moving forward, it’s likely that Australia’s higher ed sector will continue to claim the majority of granted student visas. In fact, this weighting is already reflected in the recently released National Planning Level for 2026, which details that the total cap space will increase from 270,000 to 295,000. Overall, the good news for all Australian institutions is that no providers will receive lower 2026 allocations than they did for 2025.
As part of the planned update to the Ministerial Direction, the Australian government has also outlined a new strategic priority: increasing engagement with students from Southeast Asia. Australia is a natural destination for international students from Southeast Asia who wish to stay closer to home.
Yet, new Southeast Asian student populations have fallen in recent years. The overall decline in granted student visas from 2023/24 to 2024/25 was 12%, the drop in such visas for Southeast Asian students, nearly twice as much (21%). In fact, only two Southeast Asian student populations grew over the last year:
Many Southeast Asian student populations experienced softened year-over-year demand exceeding 30%. This is largely tied to the overall reductions in VET and ELICOS enrollment, programs that used to attract many students from across Southeast Asia.
Looking ahead, Vietnam, Indonesia, and the Philippines all present clear opportunities for increased student flow and diversification in 2025 and beyond. These countries have large, increasingly mobile student populations, and many students have family connections in Australia. With support networks already in place, students from these Southeast Asia countries are more likely to be better equipped to handle cultural and financial challenges and stay focused on their education.
Learn more about factors driving Vietnam’s stability and growth as a major student population.
Demand Rising from Key Student Populations Across Asia
Although the 2026 NLP’s priority is aimed exclusively at students from Southeast Asia, Australian institutions have experienced increased student demand from across Asia over the last year. Diverse student populations across Asia have helped drive stability in 2024/25, and could become focus areas for institutions looking to ensure they utilize their full allocations in 2026:
Of these top ten growing student populations, only two were from outside Asia (Papua New Guinea and USA). As Australian institutions aim to expand their recruitment efforts to protect against volatility, students from countries including Nepal, Bangladesh, and Sri Lanka can help drive sustainable campus diversity. Bangladeshi students, in particular, were one of the only student populations to lodge and receive more visas each year for the last five years.
Looking Ahead to 2026
Since institutions have already received their indicative 2026 allotments, and a new Ministerial Direction is expected shortly to align with the NPL, Australian providers are well placed to begin planning for next year. Student demand may continue to decline and jeopardize cap allocation usage in 2026, but early evidence shows that Australia could weather the implementation of international student caps, achieving sustainability and creating the potential for modest growth.
As we look ahead to next year, it’s important to note that the levers of interest that draw students to Australia haven’t changed. Australian immigration pathways and work rights have remained largely constant, and the NPL does not impact overall migration levels. Australian institutions can reassure students that Australia remains a welcoming destination for studying abroad by communicating these key facts to potential international students. By remaining focused on student success, institutions can maximize their potential in 2026 and beyond.
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FOOTNOTES:
1. All data reported according to Australian governmental financial years, which span from July of one year to June of the next year (for example, July 2023 to June 2024 was the 2023/24 year), unless otherwise noted.
2. All data courtesy of the Australian Department of Home Affairs (ADHA). The data used for this article includes subclass 500 and subclass 570 to 576 visas lodged or granted to primary applicants located outside Australia only.
3. According to Immigration, Refugees and Citizenship Canada (IRCC) data on the new number of new study permit applications received by IRCC.
4. Ministerial Direction 107 was replaced by Ministerial Direction 111 at the end of 2024. Ministerial Direction 107 was a government directive introduced in 2023 that prioritised processing student visas based on the assumed risk level of education providers and the student’s country of citizenship.
5. Commencements are measured by the number of programs started by new international students in a given calendar year. A student can record more than one commencement if they begin more than one program within the relevant period.
6. Of these 977 VET providers, 762 (78%) have a total 2025 cap allocation of 100 spaces or less.
