Temporary migrants are engaging in the equivalent of panic buying as student visa applications from people already in the country increased to an all-time high in March, but rejection rates meant less than one in five were granted.

At the same time, news of the government’s clampdown on student visas and high rejection rates is dampening dreams of study in Australia, with potential students who are still overseas choosing not to stump up the $710 application fee.

In March, new visa applications were almost half that of a year ago.

International student Mai Le says her goal is to achieve permanent residency after she graduates. Dan Peled

A complex picture is emerging of students in their home countries shopping around for the surest study destination, with new research from IDP Education revealing the US is the big winner as Australia, the UK and Canada introduce increasingly restrictive policies to cut overall migration.

The steep rise in visa refusals in Australia has been described as “caps by stealth”, as suggestions the federal government will introduce actual caps, similar to those imposed in Canada, continue to circulate.

“We can see in the numbers that the visa caps-by-stealth approach is clearly beginning to have an impact,” said Phil Honeywood, chief executive of the International Education Association of Australia.

“There is no doubt that high rejection rates are scaring applicants away from Australia.”

The most recent data from the Department of Home Affairs show that applications for student visas from people already in Australia rose to 34,388 in March, up from 25,886 in March 2023.

However, just 6834 were approved during the month, compared to 18,604 in March last year.

The opposite is happening with prospective students who are still in their home country. In March, there were 17,036 visa applications, almost half the 31,382 a year earlier.

From January to March this year, the peak time for international student arrivals, 79,754 offshore applications were received, compared 110,636 for the first three months of 2023.

Approvals fell to 68,542, compared to 97,039 from January to March in 2023.

Visa reforms

Since last July, the government has introduced a raft of measures designed to tighten up both the flow of international students and the quality. These include higher English-language proficiency levels, proof of more money in the bank, and a crackdown on agents and colleges poaching student into cheaper, often questionable, colleges.

While many observers expect next week’s budget will contain a big increase in the cost of a visa application – possibly rising from $710 to $2100 – the idea of an absolute cap on numbers is still under consideration.

It is not thought to have the backing of some of cabinet’s most senior ministers.

However, since December, when Home Affairs Minister Clare O’Neil released the government’s long-awaited migration review, the most effective weapon in reducing student numbers appears to be the steep rise in visa rejections.

A survey of 11,500 prospective, applied and current students by recruitment firm IDP Education found that there has been a sharp increase in the popularity of the US as news of more restrictive policies in Australia, as well as in Canada and in the UK, have started to influence decisions.

Jane Li, IDP Education’s area director for Australasia and Japan, said the US used to rank last on a preference list of four major student destinations but has now leapt to first. Canada has gone from first to last.

“I don’t blame students for changing their preferences. It’s an important decision, and they are facing strong headwinds in terms of policy changes across the three major destinations,” Ms Li said.

However, the US’ newfound primacy as a destination could be short-lived. The prospect of a second Trump presidency has around a quarter of all prospective students saying they would reconsider their options.

“About 56 per cent of students said the results of the presidential election would not affect their decision, but there was a strong preference for Joe Biden over Donald Trump,” Ms Li said.

“Students are very tuned into politics and policy changes when considering their destination.”

Mai Le arrived in Australia in 2019 from Vietnam to undertake two years of senior school before moving to Queensland University of Technology to study business and IT at the beginning of 2023.

While Canada and the US were on her radar before she decided to study in Australia, policy changes have dented her confidence that she will get permanent residency after she graduates.

“The goal is to figure out how I can get PR (permanent residency),” Ms Li said. “I’m going to everything I can to achieve that.”

As AFR Weekend revealed last week, Federation University in Victoria is set to make more than 200 jobs – or 15 per cent of its workforce – redundant as its student numbers collapse leading to an $80 million slump in revenue in 2023.

At the same time, numerous small private colleges are also reeling under a sudden decline in enrolments.

“There is no doubt high-quality, small private colleges will be the most affected by all of this,” Mr Honeywood said.