Higher education operator EDU Holdings (ASX: EDU) is the first of many education companies listed on the ASX preparing for a decline in business as the Australian Government’s proposed cap on international students becomes closer to reality, expected to kick in from 2025 onwards.
The legislation, part of the Labor Government’s plans to reduce net migration, will drastically limit the intake of international students and is set to take effect on 1 January 2025, capping the number of international student commencements in higher and vocational education institutions across the country.
For 2025, the total number of international students allowed to commence studies in Australia has been set at 270,000, with 175,000 allocated to the higher education sector and 95,000 to the vocational education sector. Individual caps for providers are also being introduced, leading to concerns about the future of many education institutions, including EDU’s vocational business, Australian Learning Group (ALG).
ALG was notified by the Department of Employment and Workplace Relations of its cap for 2025, which will restrict the institution to just 447 new international student commencements. This represents a significant drop from 907 commencements in 2023 and an expected 779 commencements in 2024. The cap imposes a severe 51% reduction on ALG’s 2023 intake and a 57% cut compared to 2024 projections, marking a stark downturn in the institution’s ability to enrol international students who are widely regarded to be more lucrative than their domestic counterparts.
The implications of the 2025 cap are expected to unfold gradually, with ALG likely to experience a decline in total student enrolments. However, due to the average two-year study duration of international students, the full impact of these changes may not be immediately felt. Nevertheless, EDU has flagged uncertainty about the longer-term effects, especially given the absence of clarity on caps beyond 2025.
The legislation has sparked concerns throughout the higher education sector, with both public and private institutions feeling the impact of the government’s decision. Education Minister Jason Clare defended the legislation as a necessary measure to create a fairer distribution of international students between universities. However, this move has been met with resistance, particularly from regional and smaller universities, which argue they were blindsided by the strict limitations imposed on them.
University leaders across the country have expressed their discontent, with many institutions reporting caps that fall well below their pre-pandemic intake levels. While some regional universities have seen modest increases in their caps compared to 2023, others argue that the numbers are still far too low to restore their enrolment levels to pre-pandemic figures.
In the broader context, the government’s decision to cap international student numbers has ignited widespread debate within the Australian education industry. Many institutions, particularly those heavily reliant on international students, now face significant challenges in maintaining their operations and securing future growth.
For the Half Year ended 30 June 2024, EDU Holdings reported $16.9 million in revenue which represented a 64% increase on the previous corresponding Half Year. This returned the Company to profitability with net profit after tax of $28k with a sound cash position of $8 million, up from $4.9 million on 31 December 2023.
Mitch Korver is a Business Writer focused on high-growth companies listed on the ASX in the small and medium cap space.
Latest posts by Mitchell Korver (see all)
- Harris Technology continues growth with refurbished tech sales surpassing second $1M in just three months - October 28, 2024
- Income Asset Management flags positive cashflow via strategic platform partnership with Perpetual - October 7, 2024
- NobleOak acquires RevTech and FiftyUp Club in $11 million deal that ceases life insurance commission payments - October 2, 2024
Leave a Comment
You must be logged in to post a comment.