A major Victorian export under change.
International education — Melbourne's second-largest export sector by value after resources aren't produced locally — is being reshaped by Commonwealth caps on international student commencements introduced in 2024 and tightened in 2025. The flow-through effects on universities, private colleges, English-language providers and the CBD economy are still working through.
The Commonwealth's Ministerial Direction 111 (replacing MD107) sets provider-level commencement targets. For 2026, publicly funded universities in Victoria are permitted a combined commencement cohort roughly 12% below the 2023 baseline. Private and vocational providers face steeper cuts and, in many cases, effective visa-refusal rates above 50% for high-risk source-country combinations.
The stated policy rationale combines migration management, sector-quality concerns following the collapse of several vocational providers in 2022–23, and pressure on rental markets. Universities argue the caps are a blunt instrument that targets the sector with the strongest quality controls.
Melbourne is more exposed than any other Australian city. Around 220,000 international student enrolments in Victoria in 2024, generating roughly $16bn in economic activity, supporting about 60,000 jobs, and underpinning the CBD's daytime and evening economies. The University of Melbourne, Monash, RMIT and Deakin together enrol more than 90,000 international students.
Chinese and Indian students remain the two largest source markets, with Nepal, Vietnam, Colombia and the Philippines the largest emerging markets. The composition has become more diversified over five years, reducing single-country concentration risk.
Universities have announced cost-out programs of $150m to $400m each at the majors, with voluntary redundancies at RMIT and Deakin already run and further programs signalled at Monash and La Trobe. Non-teaching staff have borne the initial impact; academic redundancies are following at faculties heaviest reliant on international commencement revenue.
Private vocational providers face a starker picture. Several of the Melbourne CBD's largest colleges have closed or merged, and CBD landlords are converting former college floors back to office or student-accommodation use.
Retail, hospitality, transport and accommodation businesses across the CBD, Southbank, Docklands and Parkville feel the direct effects. City of Melbourne pedestrian counts show weekday CBD foot traffic has recovered to about 92% of the 2019 baseline; a further slide in international-student numbers would push that back down.
Purpose-built student accommodation (PBSA) rents have softened for the first time since 2016 as headline demand cools, though core CBD PBSA remains close to fully leased for the second semester.
The federal Coalition's position is broadly supportive of the caps but has flagged returning discretion to universities on international-domestic mix. The Greens support a stronger cap on private providers and a floor on caps for public universities. Victoria's state government has publicly pushed for a Melbourne-specific allocation formula that reflects the sector's role in the state economy.
The 2027 commencement caps (expected mid-2026), the ongoing Deloitte-led review of the Migration Program's education settings, and the university sector's Q4 enrolment intake data — which will be the first clean read on how far commencements have actually fallen versus the visa-refusal-driven attrition already visible.