Under the policy, the government will cap new international students at 145,000 for universities and 95,000 for the skills training sector, Education Minister Jason Clare said Tuesday. Almost 600,000 student visas were granted in fiscal 2023, a significant jump on previous years.

Universities have repeatedly warned that any moves to limit foreign students could damage the lucrative tertiary education industry.

“This is an important part of our economy, no doubt about it. That hasn’t changed,” Clare told reporters in Sydney after the announcement. “But as students have come back, it has put pressure on the reputation of the sector.”

Overall, there will be about 15% more students allowed for universities and 20% fewer for vocational colleges in 2025, Clare said. The government was writing to individual universities to inform them of their caps on Tuesday.

“To create the impression that this is somehow tearing down international education is absolutely and fundamentally wrong,” Clare said. “It is about making sure that we set it up in a sustainable way for the future. We want students to come and study here.”

Universities Australia Chair David Lloyd said the student caps would put a “handbrake” on the tertiary education sector.

Migration controls should not be imposed “at the expense of any one sector, particularly one as economically important as education,” Lloyd added, saying the limits would cause damage to Australia’s research and development capacity.

The Independent Tertiary Education Council Australia said in a statement that universities needed more information about the changes, saying the announcement “creates more questions than answers.”

Australia is just the latest country to crack down on international students over migration concerns, with Canada, the Netherlands and the UK all implementing or considering measures targeting the university sector. In Australia, the government has been consulting for months over plans to impose limits on foreign students, part of a broader push to crack down on high post-COVID migration numbers. The surge in migration has coincided with rising voter concerns about a housing squeeze that sent rents soaring, proving politically damaging for the center-left Labor government. 

Support for migration in Australia has fallen to its lowest level in five years, according to a poll released by Essential on Tuesday, with 42% of those surveyed saying it had a negative effect on the country.

International students contributed A$48 billion ($32.5 billion) to the Australian economy in 2023, making it the country’s top services export. 

The Property Council of Australia’s Student Accommodation Council said the cap of 270,000 student visas was “sustainable” and the government’s announcement would give investors in student housing the confidence to keep putting money in the sector.