⏳ Final hours! Save up to 60% OFF InvestingProCLAIM SALE

Why is Canada capping foreign students and who will be impacted?

Published 01/24/2024, 12:30 PM
Updated 01/24/2024, 12:36 PM
© Reuters. A view of East Hastings street in Downtown Eastside of Vancouver, British Columbia, Canada January 31, 2023. REUTERS/Jennifer Gauthier

(This Jan. 22 story has been corrected to reflect that a plurality, not a majority of foreign students, come from India, in paragraph 13)

By Wa Lone

TORONTO (Reuters) - Canada on Monday announced a two-year cap on new international student permits after explosive growth in recent years aggravated the housing shortage. Last year Canada issued nearly one million study permits, about three times that of a decade ago, according to government data, and the new proposal will cut the intake by nearly a third.

Here is how the new plans will work and what is at stake.

WHAT ARE THE DETAILS?

Canada's immigration minister, Marc Miller, said the Liberal government will introduce a temporary, two-year cap on new student permits, which will result in the issue of about 364,000 permits in 2024.

The proposals will also set limits on work permits handed out after graduation to foreign students who attended some institutions. The permits have been seen as an easy path to securing permanent residency. People pursuing master's or post-doctorate programs will be eligible for a three-year work permit.

Spouses of international students enrolled in other levels of study, including undergraduate and college programs, will no longer be eligible, Miller said. The acceptance of new study permit applications in 2025 will be subject to reassessment at the end of the current year, he said.

WHY IS GOVERNMENT CRACKING DOWN?

Canada has emerged as a popular destination for international students since it is relatively easy to obtain work permits after finishing courses. But the surge in international students led to an acute shortage in apartments, pushing up rents. In December, rents nationwide rose 7.7% from a year earlier, according to Statscan.

Prime Minister Justin Trudeau's popularity has been dented mainly due to affordability issues, and opposition Conservative Party leader Pierre Poilievre has taken a commanding lead over Trudeau in opinion polls ahead of an election next year.

Apart from the rental crisis, the government has also been concerned about the quality of education provided by some of the institutions.

WHOM WILL THIS IMPACT?

International students contribute about C$22 billion ($16.4 billion) annually to the Canadian economy. The move will hurt many educational institutions that had expanded their campuses in the hope of a continued inflow of students.

Ontario, the most populous province, received the biggest share of international students. Some businesses, including restaurants and retail sectors, have warned that a cap on foreign students will create a shortage of temporary workers.

Restaurants across Canada are grappling with labour shortages with nearly 100,000 vacancies, and international students made up 4.6% of 1.1 million workers in the food service industry in 2023, a lobby group told Reuters last week.

Canadian banks had benefited from the influx of new students, as each student is now required to have a Guaranteed Investment Certificates (GIC) of more than C$20,000, a prerequisite for international students to cover living expenses.

A plurality of foreign students, about 40%, come from India, with China coming in second with about 12%, according to official data from 2022.

© Reuters. A view of East Hastings street in Downtown Eastside of Vancouver, British Columbia, Canada January 31, 2023. REUTERS/Jennifer Gauthier

The University of Toronto said in a statement that it looks forward to working with all levels of government to ensure that the allocation of study permits recognizes institutions like U of T and addresses the problem where the challenges lie.

International students made up almost 30% of the U of T's 86,297 students last year, according to the 2022-23 enrollment report.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.