Mixed reaction to Australia’s financial capacity proposals

Australia’s government has drawn mixed reactions with proposals to require prospective international students to deposit tens of thousands of dollars in Antipodean banks before they can apply for visas.

Under options outlined in a Department of Home Affairs discussion paper, applicants would have to lodge at least A$29,710 (£15,497) in Australian bank accounts, up to three months before tendering their visa paperwork, to prove that they had “genuine and sustainable access” to funds covering their fees and living expenses.

“Verified overseas accounts” could suffice as a “transitional arrangement” in circumstances where it was “not reasonable or practicable” for students to set up Australian accounts, the paper says. It also flags an “interim measure” whereby students from countries with high immigration risk ratings would have to provide “prescribed” documentation of at least six months of financial transaction history, regardless of where they intended to study.

Assistant international education minister Julian Hill said the aim was to reduce the number of visas refused over doubts about students’ financial capacity. “The aim…is to be as clear as possible to prospective students and ensure that published rules remain aligned with the department’s internal processing,” Hill told the Australian International Education Conference in Sydney last week.

“Even if this means raising the financial standards, and a smaller pool of prospective applicants, I want the grant rates to improve and greater certainty for everyone.”

The idea is modelled on arrangements in New Zealand, where students from China, India, Nepal, the Philippines, Sri Lanka or Vietnam can be obliged to deposit tens of thousands of dollars with the Funds Transfer Scheme – which is overseen by Immigration New Zealand and operated by two local banks – before qualifying for visas.

However, the obligation only applies after the students have received in-principle approval of their visa applications.

Germany, Ireland and Norway have variations on the New Zealand arrangement. But the German and Irish schemes are optional, while the Norwegian model – which can involve Norwegian universities opening accounts on the students’ behalf – is seen by many as welcome relief from the hassle of dealing with Scandinavian banking bureaucracy.

The International Education Association of Australia said Canberra was trying to find middle ground between its need for guarantees that students could “stand on their own two feet” financially, and a cultural reluctance – particularly in South Asia – to divulge “the family’s actual worth”.

CEO Phil Honeywood said the issue had come to a head after students of offshore Australian programmes had sought visas to complete their studies Down Under, and been refused on financial capacity grounds. “The motivation behind the consultation paper is genuine, but how we land on a more useful financial tool is going to be challenging to say the least,” he said.

Consultant and former regulator Claire Field said the proposed Australian arrangements, if well implemented, were unlikely to increase the paperwork burden for educational administrators or reduce Australia’s attractiveness to students. International enrolments in Germany, Ireland and New Zealand have been rising, she noted.

Field said that if students were required to place funds in Australian bank accounts as part of the visa application process, the banks would probably welcome the business and “go out of their way” to make the process as easy as possible for students and their families.

But she said the change, on top of dozens more over the past three years, would exacerbate Australia’s reputation for “instability” in its visa settings. The new arrangements would also take months to finalise, with high visa rejection rates likely to persist in the meantime.

Field also questioned whether changes to financial capacity requirements would be enough by themselves to improve grant rates. “Rejection letters shared on social media suggest that it’s more than just financial requirements that have driven the rejections,” she said.

Immigration lawyer Marsha Bassily said the proposals would unreasonably expose prospective students to financial risk, inconvenience and potential loss. “Would you send thousands of dollars overseas before knowing whether you would even be granted a visa?” she asked on LinkedIn.

Ravi Lochan Singh, managing director of Sydney education agency Global Reach, said students who were refused visas after transferring substantial sums overseas could lose a small fortune in exchange rate variations and bank transfer charges.  

The discussion paper also flags changes to “ministerial direction 106”, which outlines how immigration officials must apply the genuine student test, to place greater weight on visa applicants’ study history. Stakeholders have until 23 November to comment on the proposals.

john.ross@timeshighereducation.com