Canada Rethinks Study Permit Caps After Sharp Decline in New International Students

Fewer New Students, More Problems

A sudden drop in international student arrivals is sending shockwaves through Canada’s universities, colleges, and the businesses that count on student spending. The Canadian government is juggling new policy tweaks after its 2025 study permit cap, set at 437,000 (a 10% cut from 2024), triggered a steep 45% plunge in fresh student approvals compared to last year. That’s not just a statistic; it’s a wake-up call to anyone tracking jobs and revenue tied to global education in Canada.

It’s not just campus dorms sitting empty. Restaurants, rental markets, tutoring centers, and tech shops around college towns are feeling the pinch. Experts point out that support services grew around ballooning student numbers over the past decade, and the abrupt reversal threatens both jobs and local economies. The talk in education circles? Some of this damage might be permanent, especially for smaller colleges that invested heavily in international recruitment.

The PAL Dilemma and Who Gets In

Trying to fix the situation, Ottawa has tightened provincial attestation letter (PAL) rules: master’s and doctoral students get reserved slots, while grad students and most current residents in Canada now face the process too. If you’re an exchange student, you’re spared—policymakers want to keep those study-abroad deals alive for Canadians heading overseas. These detailed provisions are meant to balance priorities but also pile paperwork onto students and schools.

The numbers behind these changes are even more revealing. Forecasts say study permit approvals will nosedive by 32% in 2025—far steeper than policy designers expected. Even more telling: over 60% of permits are now extensions for current students, three times what Ottawa originally thought. The approval pool is no longer new arrivals hungry for degrees but students who are already in Canada, figuring out how long they can stick around.

For policy watchers, this is a signal that Canada is leaning heavily on existing students rather than drawing in fresh talent. That shift could backfire for the job market and future economic growth. New international students used to drive demand for everything from English classes to off-campus housing and public transit. Now, the focus on permit renewals means those growth levers are stuck.

People inside the education sector aren’t shy about the fallout. College boards and business owners in cities like Toronto and Vancouver are warning that fewer newcomers will hit service revenues, impact campus diversity, and eventually slow innovation in Canada, too. Meanwhile, policymakers are caught between managing fair immigration practices and avoiding a full-blown crisis in the education economy. The debate around Canada study permits has never felt more urgent—or unpredictable.