Impact of Canada’s study permit caps “worse than Covid”

The Canadian government is on track to approve 80,000 new study permits in 2025, representing a 62% decline on last year and the lowest intake of post-secondary students since 2015, new ApplyBoard projections have shown.  

ApplyBoard CEO Meti Basiri said the “sheer magnitude of the decline” was surprising, highlighting the “critical contributing factor” of plunging approval rates, which fell far below government targets, standing at 37% for the first eight months of 2025.  

Canadian colleges and universities have been hit by a slew of policy changes since the government’s implementation of caps on international students in January 2024, which were reduced by a further 10% a year later, setting a cap of 437,000 study permits in 2025. 

While the data revealed total post-secondary study permit issuances may approach federal cap levels, nearly two-thirds will go to students already in Canada – a “historic and policy-driven shift [that] demands immediate strategic attention from the sector”, said Basiri. 

He warned of the incoming “demographic cliff” facing Canadian institutions, highlighting a projected 50% decline in the total international student population in 2026 as current onshore students graduate faster than they can be replaced by new arrivals. 

The data showed a concerning reduction in diversity as low approval rates are causing institutions to rely on a handful of ‘high conversion’ countries, leading to underrepresentation of students from across Africa, Southeast Asia and Latin America. 

What’s more, approval rates for key markets such as India and the Philippines remain weak, with recent Indian media reports suggesting as many as three in four Indian students were denied study permits this year.  

The resulting financial instability at colleges and universities is likely to further compound the loss of diversity. “As institutions may centralise recruitment efforts towards high-conversion countries to meet their Provincial Attestation Letter (PAL) allocations,” said Basiri. 

The primary risk is the looming ‘demographic cliff’

Meti Basiri, ApplyBoard

To continue recruiting in markets with historically low approval rates, institutions must rely on data-driven solutions, enable rigorous applicant screening and concentrate on strong study-plan alignment if they are to maintain campus diversity, he advised.  

In addition to the impact on students, Canadian institutions are experiencing the dire financial consequences of declining international enrolments, with more than 12,000 jobs lost as of last month, according to higher education consultant Ken Steele’s tracking of layoffs, early retirements and attrition.  

Amid widespread sector concern, the dramatic decline in new international student arrivals has been painted as a success story by IRCC, as it pursues its goal of reducing Canada’s temporary population to below 5% of the total by the end of 2027.  

However, with more than one in four Canadians projected to be over the age of 65 by the end of the decade, Basiri said the additional loss of college graduates created a “severe national risk”, exacerbating labour shortages across trades, healthcare, early childhood education and other hands-on sectors.  

While Canadian universities have shown early signs of soft recovery – with new study permit approval rates rising from 30% in May to 55% in August 2025 – the report laid bare the challenges hitting the college sector where approval rates remain “critically low” at 25%.  

What’s more, colleges are disproportionately reliant on onshore extensions, which accounted for 77% of their study permit issuances from January to August this year, setting them up to “bear the brunt of the demographic cliff, risking a rapid depletion of their international student population”, said Basiri.  

The sobering forecasts add to an already challenging environment for Canadian colleges, which have historically experienced lower study permit refusal rates than universities and whose graduates have felt the worst impacts of recent changes to the post-graduation work permit. 

The post Impact of Canada’s study permit caps “worse than Covid” appeared first on The PIE News.