In the wake of the federal government’s September 6 letters to vocational providers, outlining individual student commencement caps for 2025, concerns over potential business closures and job losses are growing.

For Simon Costain, general manager, international business development, NextEd group, the impact of the Australian government’s proposed cap on international enrolments is “far more significant” than most people imagine.

NextEd has chosen to make public its vocational commencement cap of 1,139 new international students for 2025. This compares to 2,078 commencements in 2023 and 2,636 this calendar year to the end of August, the company revealed in an ASX release.

NextEd’s proposed vocational cap sees a 45% reduction on its 2023 commencements and a greater reduction on the expected total commencements in 2024.

“The simple fact is, private education providers have invested millions in developing new courses, campuses and employment opportunities for Australian citizens,” said Costain.

“They are being punished, and many put out of business so the Labor government can say they are reducing the cost of housing.”

“At the same time, those colleges who acted cautiously, by reducing their international applications to avoid high rates of unwarranted visa rejections (to maintain or improve their evidence level ratings), have been capped proportional to their lowest recruitment periods.”

Costain raised concerns that those providers who can’t maintain operations under these cap levels will close, meaning many students will lose their study provider, and be forced into Tuition Protection Service, which he said “will cost the taxpayers millions of dollars, and result in tens of thousands of displaced students”.

Private education providers have invested millions in developing new courses, campuses and employment opportunities for Australian citizens

Simon Costain, NextEd

Providers that are left standing will need to raise their prices significantly to remain viable, while reducing costs, explained Costain – sparking fears about devastating redundancies, and decreases in course quality and the learning experience. 

“I can’t see a single benefit to Australia’s economy under this policy – it will result in tens of thousands of job losses, and a destruction of a once thriving and healthy industry that brought so much good to Australian society,” he said.

“At a time where we are lacking skilled nurses, aged careers, chefs and builders, we should be incentivising this industry, not closing it down.”

EduHoldings released an update regarding its vocational education business, Australian Learning Group, revealing its provider limit cap for calendar 2025 – a proposed 447 new international student commencements.

This compares to 907 commencements in calendar 2023 and 779 commencements for the year-to-date in 2024 (up to and including term 3 2024).

The indicative numbers for 2025 represent a 51% reduction on ALG’s 2023 commencements and an approximately 57% reduction on its projected 2024 commencements, the company said.

“In the absence of clarity around the proposed caps beyond 2025, the longer-term impact of the capping regime on EDU’s businesses remains uncertain,” the company’s statement read.

Lexis English received its cap allocation at about 11pm on September 6 and managing director, Ian Pratt, said his phone has not stopped ringing since. 

“Most providers are stunned – we’ve all been workshopping various scenarios, but the final allocations we’ve received seem to be even lower than the most pessimistic projections,” he told The PIE News.

According to Pratt, most of those who received caps on September 6 seem to be about 60% down on 2023 numbers, but many more cases are reporting much lower “catastrophic” numbers.

The final allocations we’ve received seem to be even lower than the most pessimistic projections

Ian Pratt, Lexis English

“There’s just no way forward for a provider who is currently teaching 500 students who will be limited to 30 in 2025,” said Pratt.

“At Lexis, we’ve seen our VET student numbers cut in about half. I guess we’ll have to wait and see what impact this has on our English programs.”

Lexis English has a “wide enough footprint” through domestic facing courses and overseas operations that Pratt feels confident it will survive, but he does not underestimate the challenges ahead, especially for stand alone VET providers, many of which have seen more than half their business “wiped out”.

Pratt is therefore questioning the “quality and integrity” that is supposedly at the heart of the government’s proposed policy changes.

“‘Shonky operators’ has been a mantra for government all of this year, as they have tried to spin what is an anti-immigration nill into appearing as some kind of ‘quality and integrity’ measure.

“The truth is, though, that the bottom end of the market is the winner here. Caps are based on 2023 numbers. If you were running an entirely online operation in 2023, maxing out enrolments through discounts and huge commissions, then you are the clear winner over a provider that made the decision to invest in a quality-driven staged rebuild after COVID, and now has only a fraction of the cap allocation of their ‘shonky’ rival.”

English programs have not been capped directly, but that does not mean there will not be a flow-through effect for the ELICOS sector, explained Pratt.

“With around 74% of ELICOS student visa holders intending to progress into VET or higher education, a lack of places in these areas will have a devastating impact on English language schools.

“I imagine that dual sector operators, who run English as a pathway into their own VET courses, will reserve places for their own graduates.  It’s likely this will put serious pressure on stand alone English providers. The impact on our agency partners will also be absolutely huge, particularly when coupled with other measures in the bill.”