Australia will raise its cap on foreign students by 9% to 295,000 next year and prioritise applicants from Southeast Asia, the government said on Monday.

Limits on places were announced last year as a way to rein in record migration that had contributed to a surge in housing prices, with 270,000 places made available for 2025.

“This is about making sure international education grows in a way that supports students, universities and the national interest,” Education Minister Jason Clare said in a statement.

Australia granted nearly 600,000 student visas in the 2023 financial year, as international students returned to the country in record numbers following Covid-19.

Australia's largest cohorts of students come from China and India.

As well as introducing the cap on numbers, the government also more than doubled the visa fee for foreign students in 2024 and pledged to close loopholes in rules that allowed them to continuously extend their stay.

The government’s measures to curb migration were “bearing fruit” and allowed for a modest increase in the cap in 2026, International Education Assistant Minister Julian Hill said.

“The numbers were growing out of control,” Hill told national broadcaster ABC.

“The government has taken tough decisions over the last 12 months, not always loved by the sector, to get the numbers down and get them to a more sustainable footing.”

Roughly two-thirds of places will be allocated to universities and one-third to the vocational skills training sector.

Larger, public universities would need to demonstrate domestic and international students had "access to safe and secure housing" and recruit more students from Southeast Asia to increase their individual allocations, the government said.

It was important "for Australia's future soft power that we continue to bring the best and brightest from our (Southeast Asian) neighbours to have a bit of Australia with them for the rest of their life", Hill said.

Relations with Southeast Asia have been a focus of Prime Minister Anthony Albanese’s Labour government as it looks to reduce Australia's economic dependence on China.

Universities Australia welcomed the “sensible” increase in places.

“Universities have called for growth in this critically important sector, and the government has honoured this,” CEO Luke Sheehy said.

Australia has one of the highest shares of international students globally. The sector contributed more than A$51 billion ($33.05 billion) to the economy in 2024, the country’s top services export.