Law360 Canada (October 19, 2026, 2:32 PM EDT) --
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| Sergio R. Karas |
Canada’s international student boom is ending more quickly — and more painfully — than many governments and post-secondary institutions expected. Colleges are cancelling programs, universities are freezing hiring, campuses are being consolidated and communities that built businesses, housing projects and employment around a constantly expanding student population are confronting a sharp demand shock.
Those consequences are real. They should not be minimized. But neither should they obscure the larger conclusion: the contraction was necessary.
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By 2023, Canada’s international student program had ceased to be simply an education program. It had become an interlocking system of institutional financing, temporary labour, immigration pathways, overseas recruitment and local population growth. Governments allowed enrolment to expand without corresponding controls over housing, institutional capacity, recruitment practices, program quality or compliance. The resulting model was financially lucrative but structurally unstable.
The federal government’s response since 2024 has been abrupt and, in important respects, poorly calibrated. Yet returning to the previous trajectory would be neither viable nor defensible. Canada now needs a smaller, better-regulated system — not a revival of uncontrolled growth.
From expansion to retrenchment
The scale of the boom is difficult to overstate. In the five years preceding the federal reforms, the number of international students in Canada nearly doubled, from approximately 567,000 to more than one million. More than 200,000 were added in 2023 alone — the largest annual increase in the program’s history. Study permit applications increased 121 per cent between 2019 and 2023.
The incentives supporting that growth were powerful. Canadian credentials could lead to post-graduation work permits, Canadian work experience and, for some graduates, permanent residence. Students could work during their studies, while provincial funding constraints and regulated domestic tuition encouraged institutions to recruit fee-paying international students. Immigration, Refugees and Citizenship Canada (IRCC) acknowledged internally that the program had become characterized by “unsustainable volumes,” institutional overreliance on international tuition, inadequate alignment with permanent residence opportunities and false expectations about immigration outcomes.
Ottawa began reversing course in January 2024. Most new college and undergraduate study permit applicants became subject to a national cap administered through provincial or territorial attestation letters. Each province received an allocation and distributed spaces among its designated learning institutions. Master’s and doctoral students were initially exempt.
The cap was only the beginning. Ottawa:
- raised the financial requirement for a single study permit applicant from $10,000 to $20,635, in addition to first-year tuition and travel expenses;
- restricted spousal open work permits, ultimately limiting them principally to spouses of doctoral students, students in master’s programs of at least 16 months and students in selected professional programs;
- eliminated post-graduation work permit eligibility for students beginning public-private curriculum-licensing programs on or after May 15, 2024;
- imposed language requirements for most post-graduation work permit applicants;
- tied post-graduation work permit eligibility for non-degree programs to fields associated with long-term labour shortages;
- ended the Student Direct Stream and Nigeria Student Express in November 2024;
- required students to obtain a new study permit before changing institutions; and
- created enforceable reporting and letter-verification obligations for designated learning institutions.
The field-of-study rules were recalibrated in 2025: 119 programs were added and 178 removed before IRCC restored transitional eligibility for affected students. There are now 920 eligible fields, and the list has been frozen for 2026.
The numerical retrenchment also continued. The 2025 issuance target was set at 437,000 permits, 10 per cent below the 2024 target. For 2026, IRCC expects to issue up to 408,000 permits — but that figure includes approximately 253,000 extensions. Only 155,000 are intended for newly arriving international students. The number of study permit holders had already fallen from more than one million in January 2024 to approximately 725,000 by September 2025.
Ontario’s allocation illustrates the speed of the reversal. Its permit target fell from 141,000 in 2024 to 116,740 in 2025 and 70,074 in 2026. The 2026 target is 42 per cent below the previous year’s allocation.
The contraction is no longer theoretical
Statistics Canada’s preliminary estimates show that full-time international enrolment in public post-secondary institutions declined four per cent in 2024-25 and a further 26 per cent in 2025-26. From the 2023-24 peak, the total fell by approximately 124,000 students, or 29 per cent, to roughly 300,000.
The impact has been markedly uneven. International enrolment in public college programs is estimated to have declined 42 per cent between 2023-24 and 2025-26, compared with 17 per cent at universities. New college cohorts fell by an estimated 75 per cent, while new university cohorts declined 46 per cent. Ontario experienced the largest regional contraction — approximately 92,000 students, or 36 per cent — while British Columbia declined an estimated 24 per cent.
This distinction between colleges and universities matters. Large research universities generally have more diversified revenue, longer-duration programs and greater capacity to absorb fluctuations. Many public colleges, teaching-focused universities and smaller regional institutions built operations around short-cycle international programs and repeated annual intakes. They were therefore exposed immediately when the pipeline narrowed.
The pre-existing dependence was well documented. In 2020-21, international students represented 30 per cent of enrolment at Ontario’s public colleges but generated 68 per cent of their tuition revenue. International enrolment had increased 342 per cent since 2012-13, while domestic enrolment declined 15 per cent. Five of six colleges with established public-private partnerships would likely have reported operating deficits in 2019-20 without partnership revenue, all other things being equal.
National data tell the same story. By 2023-24, student fees supplied 42.1 per cent of Canadian college revenue, up from 32.9 per cent three years earlier. Ontario was the only province where fees constituted a majority — 64.5 per cent — of college revenue.
The financial shock was therefore predictable, even if its speed was not. An arbitrated Ontario college faculty agreement reported a 48 per cent decline in first-semester international enrolment at 23 of 24 colleges between September 2023 and September 2024. More than 600 programs had been cancelled or suspended, and 19 colleges reported more than 8,000 current or planned staff reductions. The Ontario Public Service Employees Union estimated the ultimate total at close to 10,000, although that higher figure remains the union’s projection.
British Columbia has also experienced substantial disruption. A September 2026 assessment reported more than 180 program reductions and over 1,300 staffing impacts across the province’s public post-secondary sector, together with an estimated annual institutional revenue shortfall of approximately $300 million. The same reporting emphasized that larger institutions such as the University of British Columbia and Simon Fraser University remained more financially resilient than colleges and teaching universities.
The loss extends beyond campus
International education was a major Canadian export. Global Affairs Canada estimates that international students and their visiting families spent $47.5 billion in 2024, contributing almost $39 billion to GDP and supporting approximately 407,000 jobs. Ontario accounted for an estimated $20.2 billion in GDP and 199,053 jobs; British Columbia accounted for $7.36 billion and 86,470 jobs.
A rapid reduction therefore affects far more than tuition revenue. It reduces spending on accommodation, food, transportation, telecommunications and retail. It affects instructors and institutional employees, but also landlords, restaurants, service providers and small businesses in communities where international enrolment had become an economic anchor.
The housing effect, however, runs in both directions. Fewer students weaken rental demand and can impair purpose-built student housing or rental projects planned on assumptions of continuing growth. At the same time, the reduction has produced measurable relief in some previously overheated rental markets.
Canada Mortgage and Housing Corporation (CMHC) reported that the national purpose-built rental vacancy rate rose from 2.2 per cent in 2024 to 3.1 per cent in 2025. Vacancies increased most in areas with new supply or near post-secondary institutions where international student demand declined. In Toronto’s Downsview area, the vacancy rate increased from 0.7 per cent in 2023 to 3.1 per cent in 2025; in western Brampton, it rose from 1.8 per cent to 4.8 per cent. Vancouver’s purpose-built vacancy rate reached 3.7 per cent, its highest level since 1988.
These changes cannot be attributed exclusively to student reductions. New rental completions, higher youth unemployment, weaker economic growth and additional condominium units also increased vacancies. Nor has affordability been restored: rents paid by existing tenants continued to rise, and low-cost units remain scarce. But CMHC expressly identifies declining international student demand as one contributor to easing conditions in Toronto, Vancouver, Hamilton, Waterloo, London, Ottawa and other university and college communities.
Why retrenchment was justified
The economic losses do not establish that the earlier system was sustainable. They demonstrate how deeply institutions and communities had become dependent on its continuation.
Program integrity concerns were not hypothetical. The 2023 fraudulent-letter crisis involved unauthorized consultants supplying false letters of acceptance. Importantly, affected students were not a single category: of the first 108 cases reviewed by a joint IRCC-CBSA task force, 62 individuals were found to be genuine students, while others were considered complicit or otherwise non-genuine.
The subsequent letter-of-acceptance verification system uncovered the scale of the risk. Of 841,403 applications reviewed between December 2023 and September 2025, 12,131 letters were flagged for potential fraud, and another 8,666 had been cancelled by the institution. The system verified 94.1 per cent as genuine, demonstrating both that most documentation was legitimate and that direct verification was nevertheless indispensable.
The 2026 Auditor General’s report is even more troubling on post-entry enforcement. IRCC identified 153,324 students as potentially non-compliant in 2023 and 2024 but opened only 4,057 investigations.
Separately, three risk investigations identified 800 study permits issued between 2018 and 2023 on applications involving fraudulent documentation or misrepresentation. Ninety-two per cent of those permit holders subsequently sought another immigration status; 110 made asylum claims. These findings demonstrate that unresolved study permit fraud can migrate into other parts of the immigration system.
Institutional and recruitment incentives also contributed. Ontario’s Auditor General found that none of four examined public colleges had a formal policy establishing criteria for selecting or terminating overseas recruitment agents. Seven of 100 sampled agency websites made misleading claims, including “visa assurance,” guaranteed language-test scores and purportedly guaranteed visa success. Recruitment commissions ranged from 15 to 32 per cent of first-year tuition, creating an obvious incentive for volume and high-fee placements.
Public-private partnerships magnified those incentives. Private operators delivered public college curricula, while graduates received public credentials that previously supported post-graduation work permit eligibility. Ontario’s Auditor General found ineffective ministry oversight, delayed quality-assurance reviews and repeated non-compliance with enrolment limits. In 2023-24, 20 per cent of international enrolment at Ontario public colleges was concentrated in these partnership locations, with programming often poorly aligned with labour-market demand.
Responsibility was shared. Provinces constrained domestic tuition and, in Ontario’s case, provided the lowest per-student college funding in Canada at the time of the provincial audit. Institutions filled the gap with international fees. Ottawa supplied increasingly attractive work and immigration pathways, while leaving educational designation and quality oversight primarily to provinces. Recruiters received commissions for generating enrolment. Municipalities and housing systems were expected to absorb the resulting population growth.
No single actor created the boom. That is precisely why no single blunt instrument can repair it.
Painful, necessary — and still in need of refinement
The federal reforms have succeeded in reducing numbers, but implementation has not always been proportionate. The Auditor General found that 2024 approvals fell much further than forecast, and IRCC did not know why approval rates were so low. Smaller provinces expected to experience modest reductions — or even increases — instead suffered decreases of at least 59 per cent. A population-based allocation formula can also disadvantage regions and institutions with a legitimate capacity to host students but a small provincial population.
Abrupt changes to post-graduation work permit eligibility have created further uncertainty. Connecting non-degree programs to durable labour shortages is defensible; repeatedly changing eligible fields after students have made financial commitments is not. The temporary removal and restoration of programs in 2025 illustrated why clear notice and meaningful grandfathering are essential.
The policy direction should therefore be retained but improved.
First, Ottawa and the provinces should replace year-to-year improvisation with transparent, multi-year enrolment corridors tied to housing capacity, institutional performance, labour-market outcomes and regional needs. Allocations should not reward historical volume, but neither should they rely exclusively on provincial population.
Second, letter verification and mandatory enrolment reporting must be matched by enforcement capacity. Requiring institutions to report suspected non-attendance accomplishes little if IRCC can investigate only a small fraction of flagged cases. Designated Learning Institutions that fail to verify letters or report enrolment can now be barred from accepting new students for up to one year; that authority should be used consistently and transparently.
Third, provinces should regulate recruitment agents directly, require disclosure of commissions and make institutions accountable for representations made on their behalf. British Columbia has moved in this direction through annual Education Quality Assurance assessments, agent-accountability standards, stronger private-institution rules and limits on international enrolment at public institutions.
Finally, governments should publish institution-level data on enrolment, permit approvals, completion, transfers, post-graduation employment, recruitment commissions, student satisfaction and compliance. Volume was easy to measure; quality and outcomes were not. Future policy should reverse those priorities.
Students need to understand that admission to study is temporary status, not a guaranteed route to permanent residence.
The contraction is painful because governments and institutions allowed dependence to become extreme. It is necessary because continuing that dependence would have further weakened housing affordability, program integrity, student protection and public confidence.
The appropriate objective is not maximum enrolment. It is a credible international student system that Canada can properly accommodate, institutions can responsibly administer and legitimate students can trust.
Sergio R. Karas, principal of Karas Immigration Law Professional Corporation, is a certified specialist in Canadian Citizenship and Immigration Law by the Law Society of Ontario, Division Chair of the ABA International Law Section, past chair of the Ontario Bar Association Citizenship and Immigration Section, past chair of the International Bar Association Immigration and Nationality Committee, and a fellow of the American Bar Foundation.
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