Closing the Commission Loophole: Australia Bans Education Agent Commissions for International Student Transfers as New Data Reveals the Scale of Course-Hopping and Visa Exploitation

An analysis of the National Code amendment banning transfer commissions, the broader ESOS integrity reforms, and new research exposing record attrition rates among international students at Australian universities

The Australian Government has banned the payment of commissions by education providers to education agents for the recruitment of international students transferring between providers after commencing their studies. The ban, implemented through the National Code of Practice for Providers of Education and Training to Overseas Students Amendment (Education Agent Commissions) Instrument 2026—signed on 16 January 2026 by the Hon. Julian Hill MP, Assistant Minister for International Education—takes practical effect from 31 March 2026 and represents one of the most significant structural interventions in the economics of international student recruitment in Australia in recent years. The measure is directed squarely at removing the financial incentive for agents to facilitate unnecessary or non-genuine transfers of overseas students between providers, and forms part of a broader package of integrity reforms enacted through the Education Legislation Amendment (Integrity and Other Measures) Act 2025, which received Royal Assent on 4 December 2025.

The timing of the commission ban is significant. It arrives alongside new research from the Menzies Research Centre, released in January 2026, which has brought into sharp public focus the scale of international student attrition at Australian universities and the extent to which the student visa system is being used as a pathway to work rights rather than genuine education. The Menzies Research Centre’s analysis of federal higher education data reveals that first-year dropout rates among international undergraduate students have reached levels that cannot be explained by ordinary academic or personal factors alone, and that the concentration of attrition at particular types of institutions points to systemic exploitation of Australia’s visa and education frameworks.

New Data Reveals the Scale of the Problem

The Menzies Research Centre’s analysis draws on publicly available federal higher education data to track first-year attrition among commencing international undergraduate students at publicly supported Australian universities. According to the Centre’s findings, the national first-year attrition rate for this cohort climbed to 17.4 per cent in 2023—up from approximately 10 per cent before the pandemic-era border closures in 2020. In practical terms, this means that close to 15,000 international students departed their university within 12 months of commencing study in the 2023 cohort year. The Centre’s chief economist has described this pattern as indicative of systematic exploitation, arguing that the student visa system has become a backdoor mechanism for individuals whose primary objective is to secure work rights in Australia rather than to pursue genuine educational outcomes.

The data reveal striking variation across the university sector. According to the Menzies Research Centre’s analysis, 23 universities recorded first-year attrition rates of 20 per cent or higher among international undergraduate commencers in 2023, and at 11 institutions, more than 30 per cent of commencing international students left within the first year. At the extreme end, one regional university recorded an attrition rate exceeding 57 per cent—meaning that more than half of its commencing international undergraduate students discontinued their studies within 12 months. Several other institutions, including universities that have expanded their capital-city campus operations in recent years, recorded first-year attrition rates above 40 per cent. By contrast, a number of the largest and most established universities—particularly those in the Group of Eight—maintained first-year attrition rates below 5 per cent, suggesting that the problem is concentrated rather than sector-wide.

Course-Hopping, Visa-Hopping, and the Pathway to Work Rights

The Menzies Research Centre’s report identifies a pattern that has been described as ‘course-hopping’: international students enrol at a university—often one with comparatively low tuition fees and high visa acceptance rates—commence their studies to establish their onshore presence, and then discontinue their university enrolment to transfer into cheaper vocational education and training (VET) courses, or in some cases to leave formal study altogether. The report argues that this pathway allows individuals to remain in Australia on a succession of student and bridging visas on an extended basis, retaining part-time work rights throughout the process. For students whose primary motivation is employment rather than education, the specific course or provider is immaterial; the relevant consideration is the cost of maintaining visa eligibility while maximising the opportunity to work.

Supporting this analysis, the Centre’s data points to a dramatic increase in the number of individuals holding bridging visas while awaiting a decision on a new student visa application. According to the report, this cohort grew from approximately 13,000 in 2023 to more than 107,000 by mid-2025—an eightfold increase in roughly two years. These individuals retain the right to work part-time while their application is pending, with processing times creating extended periods during which work can continue. The report further notes a significant backlog in the Administrative Review Tribunal, which is processing tens of thousands of appeals against student visa cancellations and refusals, adding further time—and further work-eligible residence—to the pipeline. The Centre’s analysis suggests that the combination of accessible initial entry through a university enrolment, the ability to course-hop into cheaper alternatives, and the lengthy administrative processes for visa decisions and appeals creates an extended pathway through which individuals can remain in Australia and access the labour market for years, with the educational component becoming increasingly peripheral.

The Agent Commission Incentive: Why the Government Has Acted

The commission ban introduced through the January 2026 National Code amendment addresses a specific link in the chain of onshore student transfers: the financial incentive paid by the receiving provider to the education agent who facilitates the transfer. Under the arrangements that prevailed before the ban, an education agent—whether operating offshore or onshore—could earn a commission from a provider each time the agent recruited a student to that provider, including students who had already commenced study at a different institution. This created a direct financial incentive for agents to approach newly arrived international students and encourage them to abandon their current course and transfer to a different provider—regardless of whether the transfer served the student’s educational or career interests.

The practice has been particularly associated with transfers from higher education providers to lower-cost VET providers, where agents could earn commissions by redirecting students into courses with reduced fees and, in many cases, lower educational requirements. The Joint Standing Committee on Foreign Affairs, Defence and Trade’s inquiry into Australia’s international education sector received evidence describing how offshore agents recruit students for university enrolment—securing the student’s initial visa—only for an onshore agent (sometimes a family member or associate of the offshore agent) to then facilitate a transfer to a different, typically cheaper, provider for an additional commission. Newly arrived students were reportedly enticed with offers of fee reductions, cash inducements, employment promises, and claims about easier migration pathways.

As the Assistant Minister for International Education stated in announcing the ban, the measure is designed to ensure that agents and institutions are working in the best interests of their students, and to remove the incentive for unscrupulous agents to facilitate unnecessary transfers. The ban operates by prohibiting the receiving provider—not the student or the agent—from paying a commission for the recruitment of a student who has already commenced study with another registered provider. Students remain free to transfer where they are otherwise eligible under the National Code, and agents may still be compensated directly by students for advisory services, but the provider-to-agent commission payment that drove the transfer pipeline is now prohibited.

The Scope of the Ban and Its Three Exceptions

Under the amended National Code, the prohibition applies to any form of commission—defined broadly under the amended ESOS Act to include any monetary or other benefit given by or on behalf of a provider to an education agent in connection with the recruitment of an overseas student. This encompasses direct cash payments, per-student recruitment fees, bonuses, service fees, gifts, and any other form of incentive. The definition is deliberately broad to prevent circumvention through alternative payment structures. There are, however, three specific exceptions.

 

 

Source: National Code of Practice for Providers of Education and Training to Overseas Students Amendment (Education Agent Commissions) Instrument 2026; Department of Education Fact Sheet.

The Broader Legislative Package: Key ESOS Amendments

The commission ban is one component of a comprehensive package of legislative reforms enacted through the Education Legislation Amendment (Integrity and Other Measures) Act 2025, which passed the House of Representatives on 28 November 2025. The Act amends several pieces of legislation, with the primary changes directed at the ESOS Act and the TEQSA Act. The key amendments relevant to education providers and the VET sector are summarised below.

 

 

Sources: Education Legislation Amendment (Integrity and Other Measures) Act 2025; ASQA, “Amendments to the Education Services for Overseas Students Act 2000” (December 2025); Department of Education fact sheets.

Why This Matters for CRICOS-Registered RTOs and the VET Sector

The VET sector is at the centre of the course-hopping phenomenon identified in the Menzies Research Centre’s analysis. The typical transfer pathway described in the report and corroborated by parliamentary inquiry evidence involves students moving from higher education providers into lower-cost VET courses. For the VET providers receiving these students, the commission ban has direct operational implications. Providers that have relied on agent-facilitated onshore transfers as a significant source of international enrolments will need to fundamentally reconsider their recruitment strategy. The two-year domestic delivery requirement for new VET CRICOS applicants further narrows the pathway for establishing a VET RTO whose primary business model depends on international student transfers.

The Menzies Research Centre’s findings also raise questions about the role of regional universities that have established capital-city campuses. The report identifies that attrition rates are highest at institutions with lower tuition fees and at city-based satellite campuses operated by regional providers, and suggests that these arrangements may be deliberately targeted by individuals seeking the most cost-effective pathway to onshore work rights. Where students who drop out of these university programs subsequently transfer into VET courses—often facilitated by agents earning commissions from the receiving VET provider—the VET sector absorbs the downstream consequences of an integrity problem that begins at the point of initial university recruitment.

For legitimate CRICOS-registered RTOs, the implications are twofold. First, the commission ban removes the mechanism by which some competitors have attracted students through agent-driven poaching rather than genuine educational quality, creating a more level competitive environment. Second, the broader package of ESOS amendments—including the commission reporting requirements and the cross-ownership transparency obligations—introduces new compliance obligations that require providers to review their agent agreements, record-keeping practices, and ownership structures. ASQA’s ongoing enforcement activity against non-genuine providers, including the cancellation of more than 33,000 qualifications between October 2024 and December 2025, as documented in ASQA’s Cost Recovery Consultation Paper, further reinforces the regulatory environment in which commission-driven, low-quality training delivery is being actively targeted.

The Scale of the Sector and the Significance of the Reform

The Menzies Research Centre’s report places the commission ban in a broader context by highlighting the sheer scale of international student enrolment in Australia. According to the report, close to 1.1 million international students were enrolled in Australian educational institutions at some point during 2024, representing approximately one in every 25 people living in Australia. Universities alone enrolled approximately 482,000 international students in that year. At the same time, international enrolments at some institutions have grown at extraordinary rates, with some smaller universities recording enrolment increases of 60 per cent or more between 2022 and 2024. The report identifies a strong correlation between rapid enrolment growth, low tuition fees, and high attrition rates—a pattern that is consistent with the hypothesis that a proportion of enrolments are driven by visa access rather than educational intent.

The commission ban, the broader ESOS amendments, and the research findings from the Menzies Research Centre collectively represent a moment of significant regulatory recalibration for Australia’s international education sector. The reforms signal a clear policy intention to shift the sector’s operating model away from volume-driven, commission-incentivised recruitment and towards a framework in which educational quality, student outcomes, and system integrity are the primary metrics of success. For the VET sector, which has been disproportionately affected by both the inflow of course-hopping students and the regulatory enforcement activity that follows, the reforms carry particular significance.

Compliance and Enforcement: What Providers Must Do

The amended ESOS Act provides the Department of Education with powers to request detailed information from providers about their commission payments to education agents. A provider may be required to disclose the total dollar amount paid to each agent, the value and description of any non-monetary benefits provided, and the number of accepted students recruited by each agent. Failure to comply constitutes a breach of the ESOS Act and may result in regulatory action by the relevant ESOS agency—ASQA for VET providers and TEQSA for higher education providers. The cross-ownership notification requirements add a further transparency layer, requiring notification within 10 business days of any change in ownership or control arrangements between the provider and an education agent.

Providers should take immediate steps to review all existing agreements with education agents, identify any provisions that contemplate commission payments for the recruitment of transfer students, and amend those agreements before 31st March 2026 for any students not yet accepted. Internal processes should be established to verify, before any commission payment is made, whether the student in question has commenced study with another registered provider and whether one of the three exceptions applies. Record-keeping practices should be updated to capture the information that may be requested under the commission reporting provisions. Providers should also review their ownership and control structures to determine whether any cross-ownership notification obligations are triggered.

Outstanding Questions and Sector Considerations

While the commission ban has been broadly welcomed by sector stakeholders who have long advocated for action on onshore poaching, questions remain about its practical effectiveness. Some sector commentators have argued that the ban addresses the provider-to-agent financial incentive but does not directly address the inducements offered to students themselves—including reduced fees, cash-back arrangements, and employment promises—which may continue to drive non-genuine transfers. There is a concern among some industry participants that the ban may push poaching activity underground, with providers and agents finding alternative payment structures or informal arrangements to circumvent the prohibition.

The Menzies Research Centre’s findings add a further dimension to this debate. If the Centre’s analysis is correct that a significant proportion of international student enrolments at certain institutions are driven primarily by a desire to access work rights rather than by genuine educational intent, then the commission ban—while necessary—addresses only one element of a more systemic problem that extends to visa policy, institutional recruitment practices, and the economic incentives facing students themselves. The combination of the commission ban, the two-year domestic delivery requirement for new VET CRICOS providers, the strengthened fit and proper provider requirements, and the ministerial course suspension powers represents a multi-layered response, but the effectiveness of these measures will ultimately depend on the rigour and consistency of their enforcement.

A further question relates to the treatment of legitimate transfers. International students may have entirely genuine reasons for changing providers, including dissatisfaction with educational quality, personal circumstances, a desire to study a different discipline, or progression from one qualification level to another. The exception for students who have completed their principal course protects the progression pathway, but some sector participants have questioned whether the ban may inadvertently create friction for students with other legitimate reasons for transferring, even where no improper agent commission is involved. The Department of Education’s published fact sheet provides some clarification, but providers and agents will likely seek further guidance as specific scenarios arise in practice.

A Sector at a Crossroads

The ban on education agent commissions for international student transfers, considered alongside the broader ESOS integrity reforms and the Menzies Research Centre’s analysis of student attrition, marks a significant turning point for Australia’s international education sector. The regulatory and evidentiary environment now clearly points to a system in which integrity concerns have moved from the periphery to the centre of policy attention, and in which the financial and operational models that enabled commission-driven, low-quality, or non-genuine recruitment are being systematically dismantled.

For providers operating with integrity—including CRICOS-registered RTOs that deliver genuine training and assessment to international students—the reforms are broadly supportive. They remove unfair competitive advantages previously enjoyed by providers whose recruitment model was built on agent-driven onshore poaching, and they create a more level playing field in which competition is based on educational quality and student outcomes. For the sector as a whole, the combination of the commission ban, the strengthened ASQA and TEQSA enforcement activity documented in this and previous editions of RTO News, and the proposed 2026–27 cost recovery model collectively signal a regulatory environment in which the costs of non-compliance are rising, the pathways for non-genuine operators are narrowing, and the expectations placed on all participants in Australia’s international education system are being fundamentally reset.

 

Key Dates

 

Sources and References

•  National Code of Practice for Providers of Education and Training to Overseas Students Amendment (Education Agent Commissions) Instrument 2026, signed 16 January 2026

•  Education Legislation Amendment (Integrity and Other Measures) Act 2025 (Cth), received Royal Assent 4 December 2025

•  Education Services for Overseas Students Act 2000 (Cth), as amended

•  Department of Education, Fact Sheet: Ban on the payment of agent commissions for onshore transfers (education.gov.au/higher-education/resources/ban-payment-agent-commissions-onshore-transfers)

•  Ministers’ Media Centre, “Protecting international students by banning agent commission payments for transfers,” media release by the Hon. Julian Hill MP

•  ASQA, “Amendments to the Education Services for Overseas Students Act 2000,” published December 2025 (asqa.gov.au)

•  Department of Education, “Changes to the legislative framework for overseas students” (education.gov.au/esos-framework)

•  Second Reading Speech, Education Legislation Amendment (Integrity and Other Measures) Bill 2025, Ministers’ Media Centre

•  Menzies Research Centre, report on the scale of international students in Australia, January 2026 (menziesrc.org)

•  ASQA, Cost Recovery Consultation Paper 2026–27, released January 2026

•  IEAA, “Australian Government Amends National Code of Practice on Education Agent Commissions,” January 2026

•  Study Australia, “Protecting the international student experience” (studyaustralia.gov.au)