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Canada's cap on foreign students costs colleges Rs 8,000 cr loss: Explained

Immigration Minister Marc Miller has maintained that the federal government is not responsible for the financial issues facing institutions

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Surbhi Gloria Singh New Delhi
7 min read Last Updated : Jan 24 2025 | 2:48 PM IST
Canadian colleges and universities are in hot water! In 2024, Canada introduced a cap on international study permits, resulting in a sharp decline in the number of permits issued. This policy change has drastically impacted Canadian colleges and universities, many of which have become heavily reliant on international students, particularly from India. The aftermath includes widespread layoffs, programme suspensions, and concerns about potential closures of educational institutions. 
To put into perspective, the educational institutions have already incurred losses of approximately $998 million (Rs 8,000 crore), not including additional losses in provinces such as British Columbia and in other institutions not accounted for in the report. 
“There is already a considerable financial impact, and several colleges have announced plans to discontinue many courses as their revenue is set to drop by tens of millions of dollars,” Darshan Maharaja, a Canada-based immigration analyst, told Business Standard.
 
Colleges face financial challenges
 
Mohawk College, located in Hamilton, Ontario, has been hit hard by the policy shift. In December 2024, the institution announced a 20 per cent reduction in administrative staff and suspended 16 programmes for the upcoming academic year. Services such as City School, which offered free courses to help community members enhance their skills or transition to new jobs, were also discontinued.
 
According to Local 241 of the Ontario Public Service Employees Union, which represents support staff at Mohawk College, additional layoffs are anticipated in 2025, with affected employees expected to receive notice soon,

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In November 2024, Mohawk College projected a $50 million budget deficit for the 2025-2026 financial year. This financial shortfall is attributed to a significant decrease in international student enrolment. The college has announced plans to cut between 200 and 400 jobs as a cost-saving measure.
 
Northern College in Timmins is facing similar financial difficulties. In a news release issued on January 17, 2025, the college revealed it expects an operational deficit of $6 million for the 2025-2026 academic year, which could rise to $12 million the following year. Northern College relies heavily on tuition fees from international students, who accounted for almost 80 per cent of the institution’s enrolment during the 2021-2022 academic year. The vast majority of these students were from India.
 
Northern College enrolment breakdown (2021-2022)
India: 3,353
Canada: 833
Unknown: 33
Philippines: 15
 
“Unfortunately, due to the combination of existing funding models, reduced international recruitment numbers and growing costs due to inflation, Northern has had to make the difficult decision to reduce its existing staffing complement,” said Mitch Dumas, president and CEO of Northern College in the press release.
 
The college has not yet disclosed the number of staff and faculty positions that may be affected by these financial difficulties.
 
Federal policy and its ripple effects
 
The Canadian federal government announced in September 2024 a reduction in international study permits by 10 per cent, setting a target of 437,000 permits for 2025 and 2026, down from 485,000 in 2024. This decision has led to immediate financial repercussions for colleges and universities, which depend on the higher tuition fees paid by international students.
 
Council of Ontario Universities president Steve Orsini on January 9, 2025 noted the extensive impact on the sector. “It’s had a profound negative effect on the sector at a time when Ontario universities are facing financial challenges,” he said.
 
Orsini added that Ontario universities collectively expect a loss of $330 million in the current financial year and $600 million in the next. He described widespread cost-cutting measures, including programme and service reductions, hiring freezes, and deferred infrastructure investments. “We’re seeing across-the-board cuts in programming and services, layoffs, hiring freezes, deferred capital investments. We have nine student residence projects … that have either been cancelled or delayed,” Orsini explained.
 
The total financial loss to Canadian colleges and universities due to the cap on international study permits:
 
1. Ontario Universities:
Loss of $330 million in the current financial year.
Projected loss of $600 million in the next financial year.
 
2. Mohawk College:
Projected $50 million budget deficit for the 2025-2026 financial year.
 
3. Northern College:
Projected $6 million deficit for 2025-2026.
Projected $12 million deficit for 2026-2027.
 
4. General Post-Secondary Sector in Ontario:
Spending drop of $752 million in the first half of the 2024-2025 financial year (this figure overlaps with the $330 million loss already noted for Ontario universities)
 
$930 million for Ontario universities over two years.
$50 million for Mohawk College.
$18 million for Northern College.
 
Estimated Total Loss: $998 million (approximately Rs 8,000 crore) to Canadian colleges and universities, excluding additional losses in provinces like British Columbia and other institutions not covered by Business Standard.
 
Impact on students and institutions
 
The financial challenges have led to significant changes across various institutions. For example:
 
Sheridan College suspended 40 programmes in November 2024.
Seneca College temporarily closed its Markham campus due to declining enrolment.
Centennial College halted 49 programmes following the reduction in international student permits.
 
At Mohawk College alone, international applications for 2024 dropped by 23 per cent, and similar declines have been reported across Ontario. Domestic students, who pay lower tuition fees, cannot offset the revenue loss. For example, domestic undergraduate tuition at Toronto Metropolitan University ranges from $7,200 to $11,000, while international students pay approximately $35,000 to $40,000 for the same course.
 
Some provincial governments have stepped in to mitigate the impact. British Columbia allocated £3.12 billion to its post-secondary institutions for the 2024-2025 academic year, representing a 24 per cent funding increase. Ontario introduced a three-year, £903 million sustainability fund for universities and colleges while maintaining a tuition freeze for domestic students.
 
However, Immigration Minister Marc Miller has maintained that the federal government is not responsible for the financial issues facing institutions. “I didn’t tell any university or college to charge international students four or five times what we charge domestic students. That isn’t my role in this,” Miller said in December 2024.
 
Miller acknowledged that the cap on international student permits was a “blunt instrument” aimed at addressing concerns about questionable practices within some for-profit career colleges. He noted, however, that the funding model used by many post-secondary institutions is unsustainable. “That’s not a healthy business model, and it’s one that Ontario in particular needs to address quickly,” he said.
 
Ongoing challenges
 
According to Global News, a Canadian news organisation, documents obtained through freedom of information laws show that Ontario’s post-secondary sector had become highly dependent on international students. In 2023-2024, international students accounted for 43 per cent of enrolment across the sector, with Indian students making up 67 per cent of that figure.
 
Colleges such as Northern (88 per cent international enrolment), Lambton (85 per cent), and Conestoga (77 per cent) are particularly vulnerable to changes in international student policies. These institutions now face uncertain futures as they adjust to reduced enrolment and funding.
 
50,000 foreign students 'missing in action'
 
Meanwhile, close to 50,000 international students who received study permits in 2024 were reported as "no-shows" at the colleges and universities where they were expected to enrol, according to Immigration, Refugees and Citizenship Canada (IRCC). These students, who made up 6.9 per cent of the total international student count, did not attend their designated institutions. Among these, nearly 20,000 were from India, representing 5.4 per cent of Indian students tracked by IRCC.
 
The no-show issue has drawn attention to potential abuse of the international student system. “One way to dampen abuse would be to require international students to pay fees upfront before arriving in Canada,” Global News quoted Henry Lotin, a former federal economist and expert on immigration.
 
"The regime for international study permit was extremely lax until recently (and still is, but to a lesser degree). The many weaknesses of the system were used by a lot of people to use study permit as a back door entry to Canada. The real number of no-show students is most likely much higher than 50,000," Maharaja said.
 
Universities and colleges are required by IRCC to report twice annually on whether international students are enrolled and attending classes in compliance with their study permits. The International Student Compliance Regime, implemented in 2014, was designed to identify fraudulent activities and assist provinces in monitoring questionable institutions.

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Topics :Canada ImmigrationCanada

First Published: Jan 24 2025 | 1:34 PM IST

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