Winnipeg Economic Digest Vol. 3, Issue 1
Bottom line
Immigration, Refugees and Citizenship Canada (IRCC) made several changes to the international student study permit system recently. In Q4 of 2023, the IRCC acted to curtail letter of acceptance (LoA) fraud created by some education agents. The IRCC also increased the required cost-of-living amount for a single student to $20,635 per year and set it to adjust annually with changes to the low-income cut-off program. This will lead to better experiences for international students and improve Canada’s reputation in the post-secondary education sector.
The big change came on January 22, 2024, when they announced a cap of approximately 360,000 per year for undergraduate and college-level international student study permits for 2024 and 2025. The aim is to squeeze out bad-actors in the education provision space. There will need to be some nimble action by provincial governments to get their systems ready quickly, and to ensure the squeeze is applied primarily to bad-actors on the education supply side.
Since Manitoba’s share of study permits issued is typically lower than our population share, we may see a net benefit for the Manitoba post-secondary education ecosystem if we have sufficient housing, healthcare capacity, and training capacity. An alternate measurement sees the change as basically being a wash for the number of international students in Manitoba.
A few providers will likely have to pivot due to changes to study permits and access to the post-graduate work permit (PGWP) program. Thus, we expect some adjustments in Manitoba’s post-secondary sector on the margin. The bulk of the adjustments will fall on the provinces where their share of relevant study permits exceeds their population share.
Analysis
Designated Learning Institutes
The federal government has been making several changes to improve Canada’s system of study permits. IRCC announced on October 27, 2023, changes to the international student program to protect students. As of December 1, 2023, designated learning institutions (DLI) are required to confirm every applicant’s LoA directly with the IRCC. This is to protect international students from LoA fraud that has been occurring. [1] This change targets bad-actors amongst educational agents by ensuring that the IRCC gets a clear confirmation of the student’s acceptance by the institution directly.
The IRCC noted on January 18, 2024, that all primary and secondary schools are DLI. For post-secondary schools, though, if an institution is not listed as a DLI, then international students should steer clear. There is a list for each province and territory.
Graduates from many of the DLI are NOT eligible to participate in the PGWP program. International students should carefully note which ones are or are not if they want to be eligible for the PGWP. [2]
Cost-of-living Financial Requirements
A long-standing complaint of international students is that the previous $10,000 requirement to cover the costs of living was too low. This was a legitimate complaint. The IRCC noted on December 7, 2023 that the cost-of-living financial requirement for study permits is now changing. The new requirement will be 75 per cent of the low-income cut-off (LICO) for a single individual in a city of 500,000 or more residents, considering before-tax funds. [3] The most recent LICO was $27,514, meaning the 75 per cent share is $20,635 per year. This is more than double the former $10,000 per year required.
While the $10,000 requirement was reportedly implemented in the early 2000s, we backfit 75 per cent of LICO model to the LICO data to see where this would have resulted in $10,000 being the same as this model. It turns out that you would have to roll back to 1987 for this to have been the same, a full 37 years.
This change in the cost-of-living financial requirements will help improve Canada’s reputation amongst prospective and current students since a higher share of students will be adequately resourced, enabling them to thrive during their studies. It might even mean we retain more international students after their studies.
Chart International Student Cost-of-Living System: Back-fitting 0.75*LICO vs former system
Manitoba Cost-of-Living
Winnipeg is one of the most livable cities in the country, as recently noted in the Globe and Mail. Manitoba also has some of the lowest student fees for domestic and international undergraduate students. As of 2023/2024, Manitoba has amongst the most affordable average undergraduate tuition rates for both domestic ($5,386) and international ($18,912) students of all provinces. [4]
Changes to the issuance of new international student permits for 2024 and 2025
Existing study permits will not be affected. At the same time, there will be no caps on primary and secondary study permits and graduate study (master’s and doctoral degrees) permits. There will be a sharp curtailment of undergraduate and college study permits. Specifically, they will be capped at approximately 360,000 in each of 2024 and 2025. [5]
Applying a cap of 360,000 per year of new study permits for undergraduate students for 2024 and 2025 would bring the total number of new study permits issued down approximately 35 per cent, according to the IRCC in their January 22, 2024 press release. Using IRCC data posted on Canada’s open data portal, we can see both 2022 and 2023 exceed 360,000. [6]
As of January 22, 2024, every study permit application submitted to IRCC will require an attestation letter from the Province or Territory. The provinces and territories must establish a process to issue these attestation letters by March 31, 2024.
The student study permit cap will be allocated to each province and territory by their share of Canada’s population. Each province and territory's government will allocate their share amongst their DLI.
How might Manitoba fare if this was done strictly by population share?
Given that Manitoba’s latest population share was 3.6 per cent, it is possible that we see Manitoba’s share of the 360,000 annual study permits rise to 3.6 per cent, or approximately 13,000. In 2023, Manitoba had approximately 8,500 post-secondary study permits, giving potential room for approximately 4,500. Dividing 4,500 by the base of 8,500, we get a potential increase of 53 per cent. [7]
An alternate view sees Manitoba basically being a wash when it comes to the number of international students study permits, Alex Usher (Jan 24, 2024) "What Comes Next." So Manitoba will either make some incremental gains, or see little change.
Regardless of whether Manitoba can get more students, there is an urgency for the provincial government to act. The provinces and territories will be responsible for distributing their allocation of study permits for undergraduate degrees and various colleges, and they need to design a process by which they do this. Finally, the provinces must also have an attestation letter process in place by no later than March 31, 2024.
Getting these changes in place is urgent also on the post-secondary education demand side. Otherwise, international students may just put Canada at the bottom of the list, given the uncertainty. As with domestic university students, many early admission decisions for fall 2024 are being made now or should have already been made. [8]
PGWP Changes
Starting Sept 1, 2024, international students who begin a study program as part of a curriculum licensing arrangement (CLA) will NO LONGER be eligible for a PGWP upon graduation. Under a CLA, students physically attend a private college that is licensed to deliver the curriculum of an associated public college. [9]
These institutions have seen significant growth in attracting international students recently. They also have less oversight than public colleges and have acted as a loophole regarding PGWP. This policy action will presumably close this loophole.
Graduates of graduate programs will all be eligible for a 3-year PGWP, so they benefit from these changes.
Work permits for spouses of international students
These will only be available for spouses of international students in master’s and doctoral programs. Spouses of students in undergraduate and college programs will no longer be eligible. [10]
One of the challenges to the PGWP that has been building as student numbers soared
The Federal High Skill Immigration category includes the Federal Skilled Worker Program (FSW), Federal Skilled Trades Program (FST) and the Canadian Experience Class (CEC). These three programs together have a target of 110.8 thousand in 2024 and 117.8 thousand for both 2025 and 2026.
The CEC includes those who would fall under the PGWP. Alex Usher’s article, “The New International Student Regime” characterizes the portion allocated to the PGWP as being “capped in the mid-tens of thousands.” The number of students coming into the system from the surge of students in the last few years vastly exceeds this number, meaning many would have been out of luck or must scramble to try a different immigration pathway—especially since it is unlikely that an oversupply of PGWP-eligible students would squeeze out the FSW and FST programs.
Thus, reducing the supply of students potentially eligible for the PGWP was going to come in one way or another. By trimming the total study permits and clearly signaling which DLIs would result in the student being eligible for a PGWP, this helps reduce Canada’s reputational risk among prospective students.
Public Universities and International Students
Most Canadian public universities have been increasingly relying on international students and increasing international student fees due to freezes on domestic student fees and/or a lack of increases in operating grants. This has been an issue for some time, Alex Usher (August 29, 2018). “Canada’s growing reliance on international students,” Policy Options, IRPP.
Study permit numbers have surged post-pandemic, in part due to Ontario’s tuition freeze and constraints on public institution operating grants (Joe Friesen, January 23, 2024, “Critics warn two-year cap will hurt schools,” The Globe and Mail).
Considering these changes to the number of study permits made available, provincial governments will be pressured to increase operating budgets so that major public institutions face a lower risk of bankruptcy (see 2021 Laurentian University bankruptcy, current issues at even Queen’s University, or more in-depth on Queen's). See Higher Education Strategy Associates (2023) "The State of Postsecondary Education in Canada," to understand how the overall system stands.
Even in provinces where there is potential room to expand the number of international students being granted study permits, it may be prudent to examine how to de-risk the operating funding model for the public, post-secondary education sector.
Some the changes being brought in are reversals of pandemic-era policies, while the study permit cap is new.
The National Bank of Canada’s January 15, 2024 research article, “Canada is caught in a population trap,” and the Bank of Canada’s January 2024 Monetary Policy Report, box 3 (strong correlation between population growth and rental prices) show why there has been such urgency in the last twelve months to:
- bring in restrictions for new non-permanent residents (part of housing demand).
- take strong action to boost Canada’s housing supply and (hopefully) boost housing supply elasticity, summarized in Chris Ferris (November 29, 2023) "Factors affecting housing supply and prices".
Source: Bank of Canada, January 2024 Monetary Policy Report, Box 3, pages 15 and 16.
End Notes
[1] The IRCC is looking at adopting a recognized institution framework, that would benefit post-secondary institutions by giving study permit applications to their institution priority processing. This appears to be delayed until it can be sorted out with the provinces and territories.
[2] Manitoba currently has 47 DLI, of which 24 offer studies where international students would be eligible to participate in the PGWP program upon completing their studies. There presumably will be a negative effect on some of the 23 institutions in Manitoba where students will not be eligible for the PGWP program after they graduate. According to Alex Usher (January 23, 2024), the biggest effect will be in Ontario, BC and Nova Scotia, which have a higher share of international students than their population share.
[3] The LICO is recalculated annually. There are LICOs for 1, 2, …, 7 people, but LICO for one person shows how much it would be for a single student, so it is helpful. LICO is used elsewhere by the immigration system, so this brings more consistency to the system as well.
[4] Source: Statistics Canada, Table 37-10-0045-01, 2023/2024, Canadian and international tuition fees by level of study (current dollars). Calculations by EDW.
[5] Source: IRCC (January 22, 2024). “Canada to stabilize growth and decrease number of new international student permits issued to approximately 360,000 for 2024.”
[6] Canada Open Data (2024) “Canada – Study permit holders by study level, province/territory and year in which permit(s) became effective,” and File link.
* We estimated Dec 2023 figures, using the average December share from 2015 to 2022. These post-secondary figures may include graduate level students, which would upward bias the numbers.
[7] Given that the cap will only be in place for two years, it is not clear if Manitoba would be able to take advantage of all this potential room. Nor is it clear Manitoba has the housing, healthcare room for more students. This will bear future research.
[8] Top students and their parents are often already aiming themselves for applying to various universities by the end of grade 10 (if not earlier), so there is little time to waste under a cloud of uncertainty.
[9] This is also known as a Private-Public Partnership (PPP) between public universities and private colleges.
[10] If both spouses are attending eligible DLI's, this is a moot point.
