International education facing into challenges
International education commencements have dropped, but are broadly around pre-COVID levels.
Last week the Department of Education released the latest data on international education and training (IET) commencements and enrolments. Over the year to July 2025, commencements reached 347,834 – a 16% decrease from the same period last year (Chart 1).
Source: Department of Education (2025)
Given the size and significance of the IET sector to the national economy, concern has been expressed about the recent drop in student numbers and visa applications.
IET is Australia’s fourth largest export after coal, iron ore and natural gas, and is our largest service export – contributing more than $50 billion in export revenue in the 2023-24 financial year. Just over $20 billion (40%) of this total came from direct tuition fees, with the remainder spread across a range of other goods and services.
The sector is an important component of Australia’s economy and is large, even on a global scale. Australia has the third highest number of international students of nearly 50 OECD and partner nations, topped only by the United States and the United Kingdom.
The drop in commencements in 2025, although significant, reflects the impact COVID had on the sector. The 16% fall in commencements comes off the back of a significant post-pandemic increase which saw commencements grow by 96% between 2021 and 2024 (some of which reflected a ‘double cohort’ including people who missed out through COVID).
The 2025 IET new commencements are only 4% below 2019 levels, a sign that we are back near a more normal level of activity for the sector. Meanwhile, total IET enrolments have fallen only 1% to 925,905 after an all-time high in 2024, remaining 12% higher than recorded just two years ago in 2023 and 15% higher than in 2019.
The moderation in demand observed this year is largely concentrated in vocational education and training (VET) and English language courses (ELICOS) where commencements have fallen by 22% and 44% respectively in the twelve months to July 2025. This is largely to be expected given the introduction of international student caps this year as well as other quality and integrity international education reforms.
By contrast, higher education demand has been more resilient with commencements declining by only 3% over the past year to 172,349, remaining above pre-pandemic levels. At the same time, higher education enrolments grew 9% to reach an all time high over the year to July 2025.
While higher education commencements and enrolments at an aggregate level have been more buoyant than other sectors, the gains have not been evenly distributed. Indeed, many providers have seen falls in commencements and enrolments which have been masked by the aggregate sector data.
In part Australia is benefitting from worsening sentiment around international education in the United States, along with the relative strength of brand Australia amongst broader global instability. International students are finding that their access to key competitor markets of the USA, Canada and UK is being limited and so comparatively at least, Australia remains appealing.
This newsletter was distributed on 2nd October 2025. For any questions/comments on this week's newsletter, please contact our authors:
This blog was co-authored by Joshua Grice, Economist at Deloitte Access Economics.
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