Twelve months ago I wrote a short series comparing what happened to financial markets after the GFC with where I thought international education was heading. The argument was simple. A sector can run loosely for years, then something becomes a public issue, the headlines arrive and politicians come under pressure to show they’re doing something about it. Regulators stop accepting assurances and start asking for evidence. Most of what I described as coming has now arrived.
What changed
The Integrity Act received Royal Assent last December. “Education agent commission” now covers bonuses, incentives and non-monetary benefits, not just the commission line on an invoice, and the Department can ask an institution what it has paid each agent. Commission on onshore transfers has been banned since March. In July, TEQSA and ASQA issued a rare joint alert saying providers need to be able to demonstrate robust oversight of their agents. And PRISMS is opening up agent data across the whole sector, so an agency’s outcomes will be visible to institutions it has never worked with.
All of this is happening in a tighter market. Many institutions hold allocations they simply can’t fill, because the visas aren’t being granted. Refusal rates have climbed to levels the sector hasn’t seen in a generation, and in some of the biggest source markets the published figures already understate what agents and institutions are dealing with on the ground today. The UK is moving the same way, with universities now required to keep evidence of how they manage their agents. Demonstrate, evidence, report: I’ve heard that vocabulary before.
The first response
When something becomes a major public issue, the pressure to act pushes the pendulum hard in the other direction, and that first swing often goes further than where things eventually settle. The overswing can shock an industry. People panic, and there’s a feeling that the rules of the game have changed overnight. We’re seeing some of that now. Immigration and international student numbers have become politically sensitive, and visa refusals, tighter settings and more regulation are all part of the response. Some of those settings will probably shift again as things settle, but I don’t think the useful question is how far the first response has gone. It’s what the industry looks like on the other side of it.
What I watched happen in markets
After 2008 the response moved hard towards regulation, governance, documentation and accountability. Compliance moved from a back-office function to the centre of how banks operated, and relationships that had run on trust and a phone call had to be documented, approved and traceable. Regulators didn’t want to hear that you had a process, they wanted to see it. Some of that was refined over the following years as the market and regulators found a more sustainable level, but the underlying direction never reversed.
The firms that were prepared, or adapted quickly, were in a much stronger position. They could demonstrate how they operated, counterparties were comfortable dealing with them, and they got on with business while others were still working out what the new environment meant. They also found something I didn’t appreciate at the time: good governance made compliance easier and cheaper. They weren’t just better at satisfying regulators. They spent less time on it, because the evidence came out of how they did the work rather than being pulled together in a panic before every review, and that made them easier to deal with.
Then came the flight to quality. Firms wanted counterparties they could trust, but trust was no longer just about relationships or reputation. It meant governance and records that could withstand scrutiny. Counterparty risk was assessed properly, and the firms that couldn’t evidence how they operated became expensive to deal with until eventually people stopped dealing with them. Over time that produced a better-managed industry, one the public and regulators could have more confidence in, where the weaker participants were exposed and the quality ones emerged stronger.
The same sorting is starting here
For institutions the stakes have changed. They are carrying more policy risk, more regulatory risk and more reputational risk than they were a few years ago, and every agent and partner they work with sits inside that exposure. In a market managed through allocations, where outcomes show up in data other providers can see, the question an institution asks about a partner is shifting from how many students they bring to whether they reduce that risk or add to it. Risk mitigation becomes the focus and the result is a flight to quality.
Evidence is where it gets hard, and finance is still learning this. Since late 2021 US regulators have fined banks and brokers more than US$2.5 billion because business was being done on WhatsApp and personal phones, outside the records the firm had to keep. Now think about how terms actually move in international education: a bonus agreed in an email chain, a rate uplift confirmed on WhatsApp, a tier table sitting in a separate PDF from the agreement it belongs to. Under the new definition a lot of that is commission, and an institution that’s asked about it needs to answer from a record, not an inbox.
The partners institutions will gravitate to are the ones that make that easy, where the terms are clear, the records line up and nothing important lives in a side conversation. Good agencies already operate this way, and I expect it will count for a lot more than it used to.
There’s a commercial side to this that gets less attention. When growth is constrained, as it is in international education right now, the focus shifts from chasing volume to protecting and optimising the revenue already in the system. I saw the same thing in markets once the easy growth had gone: nobody could afford a leaky bucket, and the firms that did well were the ones that checked every one of them for holes. For institutions that means knowing exactly what they’ve agreed to pay, to whom and why. For agencies it means making sure every commission, bonus and incentive they’re entitled to is actually claimed. Both come back to the same thing, terms that are clear and records that stand up.
Where it settles
The overswing is uncomfortable, and I wouldn’t pretend otherwise. But what I saw in markets wasn’t an industry broken by regulation. It was one that came out better managed, with more trust from the public, from government and from the people working in it. I think international education is heading the same way. As things settle, quality institutions and quality agents should be in a stronger position than they were before any of this started, and the ones that prepared early will have spent the transition getting on with business rather than trying to reconstruct it.