Over the past few months, the Federal Government has tightened immigration to halt the country’s international student growth. In light of that, existing education providers like NextEd (ASX: NXD) have had to change tact. 

NextEd’s international student mix has shifted from the English language to vocational courses. Total new international student (ELICOS and vocational) enrolments grew by 11% in the March 2024 quarter compared to the previous quarter, despite tighter immigration policy. Since December 2023, international student visa approvals have sharply declined.

Nonetheless, NextEd’s vocational visa student approval rates are consistently higher than the industry average. Plus, it launched campuses on the Gold Coast and in Adelaide, which aligned with the federal government’s policy of supporting investment in domestic and international regional education.

In CY24, up till April 30, 2024, NextEd reported a positive operating cash flow of about $100k, compared to an operating cash outflow in H1 FY24 of $1.9 million. Cost-based reductions target annualised savings of about $5 million from early FY25. Campus footprint expansion is complete, with no more than $1 million in cashflows in FY25. NextEd completed a $10 million contingent liability facility with CommBank to release approximately $8 million of cash currently used to secure bank guarantees.

In May 2024, the Federal Government implemented some new policies regarding international students. The overall policy objectives are to reduce the number of new education providers and increase barriers to entry while managing the growth of existing providers like NextEd.

But, NextEd is not entirely on board with some policy changes, citing that they lack prior consultation or detail, creating uncertainty across the education industry. The government has targeted reducing international student numbers to halve net migration into Australia by 2025, mainly to ease pressure on inflation and the housing market. 

However, Accenture’s April report for The Student Accommodation Council notes that reducing international student numbers will have little effect on Australia’s cost of living or the housing crisis and will instead damage a vital export earner. As per NextEd, this battle is “political”, thus “difficult to predict”.

To date, government policy has hardest hit English language courses. At the end of April 2024, NextEd had 4,246 English language students, which was approximately 19% lower than in December 2023, when the Federal Government’s Migration Strategy was first announced.

NextEd is working to address the impacts of the current visa policy on English language student numbers. It launched in the Adelaide market in April 2024 and is actively targeting students who will require longer-duration English language studies to achieve the higher language proficiency levels required to progress into other courses, as legislated in March 2024.

It is also encouraging international students to package English language studies with NextEd’s vocational courses in their initial visa application to demonstrate their genuine education intentions.

In March 2024, NextEd launched three new vocational courses in aged care, individual support, and community services for international students, besides hospitality and healthcare. 

These courses are aligned with the Federal Government’s December 2023 Migration Strategy and address critical skilled workforce needs. NextEd expects the number of international students undertaking healthcare and hospitality courses to grow further in the June 2024 intake.

In late April 2024, NextEd received confirmation that a new, internally developed ‘Diploma of E-Commerce’ is ASQA-approved for exclusive accreditation for five years.

As the Australian government takes a step back and pauses new university registrations, NextEd finds its recent campus expansions and course accreditations in a profitable position.