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A loophole in Australia’s visa system that allowed international students to abandon university courses for cheap private colleges, so they could work instead of study, has been closed.

An investigation by this masthead this month revealed the policy had led to a sprawl of “ghost colleges” across Melbourne, where tens of thousands of students are registered to learn, but few attend their courses.

Education Minister Jason Clare says the loophole has been closed immediately.Credit: Martin Ollman

Under changes made by the federal government, students will no longer be allowed to move from a university to a vocational course until six months into their study.

Most people coming to Australia on a student visa enrol in a university – yet many end up in vocational education via a “concurrent study” arrangement, which allows them to enrol in both a university and vocational course at the same time.

The rule was designed to help students prepare for employment through short courses such as barista training. Instead, growing numbers have been getting their visa through a university, then moving to a cheaper vocational course before they can be charged for their first university semester.

The government has also flagged a crackdown on fraudulent visa paperwork and “predatory” education providers rorting the system. It is now considering invoking never-before-used powers to issue suspension notices to high-risk providers, which would stop them recruiting international students.

Home Affairs Minister Clare O’Neil said the government would not tolerate those exploiting students. “The party is over, the rorts and loopholes that have plagued this system will be shut down,” she said.

Federal Education Minister Jason Clare said that as international students had poured back into the country – in the year to June 2023, half a million overseas students came to Australia – issues around “unscrupulous players” had emerged.

Government data reveals that, in vocational education, more than half of the growth in international students is at smaller providers, where visa refusal rates have also climbed. There were 40,000 refusals in the VET sector last financial year alone.

The government said it had been driven by a rise in the use of fraudulent documentation and students wanting to come to Australia primarily to work, not study.

More than 200 small education providers have already been singled out for review, with visa refusal rates higher than 50 per cent.

Federal Labor MP Julian Hill, who once headed international education for the Victorian government, said the misuse of concurrent enrolments had turned student visas into low-cost work visas.

Hill said the former government led by Scott Morrison was warned the model was being misused as far back as 2021 and did nothing.

International Education Association of Australia chief executive Phil Honeywood.Credit: Flavio Brancaleone

This year, there has been a sharp uptake in the use of concurrent enrolments – 17,000 in the first half of 2023 compared to 10,500 for the same period in 2019 and 2022 combined.

International Education Association of Australia chief executive Phil Honeywood said the crackdown would help re-establish Australia’s reputation as a world-class study destination and focus on genuine students.

“Because the Morrison government allowed for uncapped work rights for international students when they reopened the borders, we’ve had thousands of non-genuine students come in to earn Australian dollars,” he said.

Global Reach agent Ravi Lochan Singh has recruited students to Australia for 32 years and wants a clean-up of the sector. He said the loophole should be closed for 12 months rather than six and suggested following the New Zealand model, where a visa is linked to a particular education institution.

Australian National University higher education expert Andrew Norton said the changes were sensible and would go some way to repairing the reputational damage done to the industry. Exceptions can still be made for students needing a concurrent arrangement if signed off by the original education provider.

But Norton stressed that enforcement would have to be beefed up to keep questionable providers in check. “It’s one thing to have the rules. It’s another to have the inspectors out there.”

Meanwhile, from October 1 students applying for a visa will also need nearly 20 per cent more savings in the bank than they do now, at least $24,505.

The government said the requirement had not been indexed since 2019, and needed to reflect higher living costs so students did not fall victim to exploitation as they chased urgent employment.

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