Vocational colleges say hundreds of institutions teaching foreign students may face closure due to the Albanese government's crackdown on student visas.

A letter allegedly obtained by The Australian Financial Review reportedly says one in five such institutions could go bankrupt if proposed reforms to uphold system integrity proceed.

Approximately 200 small providers, out of the 1000 registered to teach international students, could be vulnerable to a proposal that would suspend colleges if visas are rejected for at least 50 per cent of recruited students.

A surge in temporary migrants, especially international students, entering Australia in the past year has prompted the government to address the issue. 

The number of student visa holders reached a record high of 660,765 by the end of June, marking a 203,000 increase from the beginning of the year.

The influx of students has also led to increased pressure on the rental market, coupled with reports of corrupt practices by unscrupulous education agents, colleges, and individuals exploiting student visas as a gateway to employment.

Currently, around 90 per cent of visa applications from countries like India, Bangladesh, and Nepal for vocational courses are rejected, a statistic challenged by the draft letter as seemingly baseless.

The proposed reforms, requiring legislative changes, are anticipated to be in place by March at the earliest. 

The letter attributes the need for these changes to media exposure of corrupt practices, the registration of 200 new colleges by the regulator since the pandemic, with another 100 awaiting registration, and the government's decision to introduce reforms.

Over the past three months, the federal government has announced various changes aimed at preventing widespread abuse of the student visa system. 

Measures include halting the poaching of students from legitimate education establishments to dubious colleges, which often lack teaching resources and act as gateways to the job market.

The introduced changes also include financial requirements for prospective students, closing loopholes allowing course jumps within the first six months, and empowering the Australian Skills Quality Agency to combat unethical behaviour in suspect colleges. 

Additionally, education agents will be prohibited from receiving commissions for student poaching.

Government data reveals a record-high 136,000 visa applications for vocational courses in 2022-23, surpassing the previous record of 103,000 in 2019-20.

The International Education Association of Australia has called for scrutiny on colleges offering questionable courses, particularly in leadership and business, as such programs make a mockery of providers genuinely delivering training in skill shortage areas.