Canada’s Cap on Foreign Students: Impact on Colleges and Financial Losses
Canadian post-secondary institutions are facing significant challenges following the introduction of a cap on international study permits in 2024. This policy shift has led to a sharp decline in the number of permits granted, affecting many colleges and universities that heavily depend on international students, especially those from India. The consequences are dire, including layoffs, suspensions of academic programs, and fears of institutional closures.
Financial Toll on Educational Institutions
The financial damage is profound, with educational institutions already reported to have lost around $998 million (approximately Rs 8,000 crore). This figure does not account for additional losses experienced in provinces like British Columbia and other institutions omitted from the report.
Darshan Maharaja, an immigration analyst based in Canada, highlighted the immediate financial repercussions: “Several colleges have declared their intention to reduce course offerings as their revenues are poised to fall by tens of millions of dollars,” he stated in an interview with Business Standard.
Colleges Struggling Financially
Mohawk College in Hamilton, Ontario, is one of the institutions hit hardest by this new policy. The college announced in December 2024 a 20% reduction of its administrative workforce and the suspension of 16 programs for the upcoming academic year. Notably, services such as City School, which provided free courses aimed at enhancing community skills or aiding job transitions, were also halted.
Local 241 of the Ontario Public Service Employees Union, representing Mohawk’s support staff, predicts further layoffs in 2025, with notices expected to go out soon.
Mohawk College expects a budget deficit of $50 million for the financial year 2025-2026, largely due to the dropping number of international students. To mitigate this budget shortfall, the college plans to eliminate between 200 and 400 jobs.
Similarly, Northern College in Timmins anticipates an operational deficit of $6 million for the 2025-2026 academic year, which could escalate to $12 million the following year. With 80% of its enrolment during the 2021-2022 academic year comprising international students—primarily from India—the college is under severe financial stress.
Northern College Enrollment Breakdown (2021-2022)
- India: 3,353 students
- Canada: 833 students
- Unknown: 33 students
- Philippines: 15 students
According to Mitch Dumas, president of Northern College, the institution was left with no choice but to reduce its workforce due to existing funding models, declining international recruitment numbers, and rising inflation costs.
Federal Policy Implications
In September 2024, the Canadian federal government announced a 10% reduction in international study permits, lowering the target from 485,000 in 2024 to 437,000 for 2025 and 2026. This decision has resulted in immediate financial strain for many colleges and universities, which rely heavily on the higher tuition fees paid by international students.
Steve Orsini, president of the Council of Ontario Universities, noted on January 9, 2025, that this policy has had a significant negative impact. He projected losses of $330 million for the current financial year and an expected $600 million in the following year across Ontario universities. Orsini elaborated on the extensive cost-cutting measures being implemented, including program reductions, hiring freezes, and deferred infrastructure investments.
Snapshot of Financial Losses in the Sector
- Ontario Universities:
- Loss of $330 million in the current financial year.
- Projected loss of $600 million in the subsequent financial year.
- Mohawk College:
- Projected $50 million budget deficit for 2025-2026.
- Northern College:
- Anticipated $6 million deficit for 2025-2026.
- Expected $12 million deficit for 2026-2027.
- General Post-Secondary Sector in Ontario:
- A spending drop of $752 million in the first half of the 2024-2025 financial year.
- Total estimated financial loss: $998 million, excluding further losses in provinces such as British Columbia.
Consequences for Students and Institutions
The financial upheaval has led to significant institutional changes. Noteworthy actions include:
- Sheridan College halting 40 programs in November 2024.
- Seneca College temporarily shutting its Markham campus due to reduced enrolments.
- Centennial College suspending 49 programs after the decline in international student permits.
At Mohawk College alone, international applications for 2024 have dropped by 23 percent, with similar trends observed across Ontario. Domestic students, who have lower tuition fees, are unable to compensate for the lost revenue. For example, tuition for domestic undergraduates at Toronto Metropolitan University ranges from $7,200 to $11,000, whereas international students pay around $35,000 to $40,000 for the same education.
Some provincial governments have taken action to help offset these financial burdens. British Columbia allocated £3.12 billion to its post-secondary sector for the 2024-2025 academic year, a funding increase of 24%. Meanwhile, Ontario introduced a three-year sustainability fund of £903 million for universities and colleges while freezing tuition fees for domestic students.
Despite these efforts, Immigration Minister Marc Miller asserts that the federal government bears no responsibility for the financial difficulties confronting these institutions. “I never instructed any university or college to charge international students four to five times more than domestic students. This is not part of my role,” he stated in December 2024.
Miller maintained that the cap on international study permits is a “blunt instrument” designed to address the issues surrounding certain for-profit career colleges. Nonetheless, he admitted that the funding model many post-secondary institutions rely on is unsustainable and requires urgent attention, particularly in Ontario.
Persistent Challenges Ahead
According to Global News, documents acquired through freedom of information laws reveal that Ontario’s post-secondary institutions have become notably dependent on international students. In the 2023-2024 academic year, international students made up 43 percent of enrolment in the sector, with Indian students constituting 67 percent of that demographic.
Colleges such as Northern (with 88% international enrolment), Lambton (85%), and Conestoga (77%) are particularly exposed to fluctuations in international student policy, now facing uncertain futures as they adapt to declining enrolment and dwindling funding.
Missing Foreign Students
Moreover, about 50,000 international students who received study permits in 2024 were reported as “no-shows” at their designated colleges and universities, according to Immigration, Refugees and Citizenship Canada (IRCC). This group, accounting for 6.9 percent of total international student numbers, includes nearly 20,000 students from India, representing 5.4 percent of all Indian students tracked by IRCC.
The no-show phenomenon exposes potential exploitation of the international student framework. “To curb this abuse, it may be necessary to require international students to pay fees upfront before arriving in Canada,” suggested Henry Lotin, a former federal economist and immigration expert.
Commenting on the issue, Maharaja expressed concern, stating, “The previous international study permit regime was overly lenient and was exploited by many seeking entry into Canada through non-genuine means. The real number of no-show students may be far greater than 50,000.”
Universities and colleges are mandated by the IRCC to report bi-annually on international students’ enrolment and attendance compliance with their study permits. The International Student Compliance Regime, which was enacted in 2014, aims to identify fraudulent activities and assist provinces in overseeing questionable institutions.