Canada: A case study of immigration policy impacts on postsecondary institutions and the wider economy

In January 2026, Canadian higher education institutions will enter the third consecutive year of caps on new international student enrolments. Those caps were designed to reduce pressure on public services and housing, but the rapid influx of new international students and foreign workers in the five or so years prior to the cap’s introduction in January 2024 was only one component of the country’s infrastructure issues.

There is some evidence that falling international student numbers have helped to ease rental rates in some cities and towns. But the other part of the story is that more rental housing has been built in the past couple of years, and this additional supply has contributed as well to more affordable housing on the market.

Housing costs aside, what effects have the cap and other blanket immigration policies had on the Canadian economy?

Those effects can already be measured in the billions, and financial losses are just one aspect of them. The Canadian postsecondary system is reeling, and local economies are losing essential talent.

No immediate way to mitigate plummeting student numbers

Research from higher education consultant Alex Usher finds that between 2010 and 2023, “international student tuition was responsible for 100% of new operating revenue in [Canada’s post-secondary] sector.”

Should things have gotten to that point, where postsecondary institutions became so entirely dependent on international students for survival? Of course not. But a few other realities explain how this state of affairs came to be. From a recent analysis by chartered bank RBC:

“Public spending on postsecondary institutions in Canada has fallen from 1.47% of GDP at its height in 2011 to the current OECD average of 1.1% – a sustained decline that is rare among other OECD countries. As a percentage of GDP growth, public spending is CDN$13 billion short of where it was 15 years ago.”

On top of this, provincial governments have prevented postsecondary educators from raising domestic tuition fees: “Most undergraduates are paying roughly what they would have paid 10 years ago for the same programme.” Needless to say, while tuition rates have been frozen, nearly all categories' operating costs have continued to increase.

These facts highlight:

1. How impossible it has been – for years and years – for many institutions to generate sufficient operating revenues outside of international student tuition.
2. How difficult it has been for these institutions in the past two years of the cap to keep staff and programmes running given that any significant increase in public funding is nowhere to be seen.

The list of damages resulting from the cap is long.

Across only six institutions in Ontario, the Canadian province with the most international students, financial losses already exceed CDN$140 million since 2024. Relatedly, the Globe & Mail reports that, as of July 2025, Ontario’s public colleges have already had to suspend 600 programmes and lay off between 8,000 and 10,000 staff.

In British Columbia, the next largest enroller of international students in Canada, postsecondary institutions’ losses are expected to be surpass CDN$300 million annually. At one of the province’s colleges, Okanagan College, the student union has met with institutional leadership to voice a concern about the declining quality of student experience on campus as the college’s staff increase their focus on recruiting enough students to keep programmes open.

In the province of Saskatchewan, at least 100 staff have been laid off at Saskatchewan Polytechnic (Sask Polytech) – a research powerhouse in Canada that ranks first in the Top 50 Research Colleges list compiled by Re$earch InfoSource. International enrolments at this institution are down 40% and revenue losses are in the tens of millions.

Profound, multifaceted damage

The example of Sask Polytech reveals that current revenue drops are only a small slice of the damage the caps are inflicting on Canada’s postsecondary system and local economies. Larry Rosia, the polytechnic’s president, told the Globe & Mail: “We were able to run additional programmes with additional seats for domestic students as a result of our international enrolments, and that won’t happen now. We just don’t have the funds.”

In other words, domestic high school students are facing a more impoverished postsecondary system because the steep drop in operating revenues caused by the cap is affecting the number and quality of programmes and the research capacity of colleges and universities. The think tank Policy Options adds: “Financial losses also reduce funding for additional student supports such as mental health services, financial aid and expanded work-integrated learning opportunities.”

Sask Polytech’s struggles also highlight the cap’s impact on research and innovation specific to local economic needs and skills gaps. The institution is known for its collaboration with provincial industry partners to help them to improve processes and respond to issues in communities. Examples have included:

• A collaboration in 2022/23 with Ground Truth Agriculture Inc., a company that specialises in real-time grain quality data, in which the polytechnic helped to refine their advanced artificial intelligence systems through its Digital Integration Centre of Excellence.
• A collaboration with NWC Wild Rice Company to create an efficient and easily repairable propulsion system for wild rice harvesters in northern Saskatchewan. This project also included a complementary community-based training program for maintenance and repair.
• A Virtual Interventions and Community Connections for Indigenous Youth (VICCIY) initiative in 15 rural and remote communities across Saskatchewan, with a focus on addressing disparities in mental health care access and support experienced by Indigenous youth.

The polytechnic has four campuses across the province, further enabling it to refine programmes to local needs.

Here, another element of the cap’s design is worth noting: It considers national rather than regional labour force needs, which experts believe is detrimental to local economies. With revenue losses as steep as those experienced at Sask Polytech (and many other Canadian institutions known for strong industry collaborations), smaller towns and/or those in rural regions become more vulnerable in terms of:

• Job losses (e.g., at the college or university in their community);
• Programme closures;
• A reduced pool of graduates with skills relevant to local realities.

The Retail Council of Canada noted in October 2025: “Lower student and staff spending ripples through retail, food service, fitness, transit, and neighborhood services, softening sales for small businesses and reducing demand for street-front and strip-mall space near campuses.”

Policy Options adds: “When we starve an institution of its training capacity, we directly undermine local employers, industry and in some cases regional economic sustainability.”

“If we were talking about any other industry – the steel industry, the auto industry, the lumber industry – it would be on the TV every night and the federal government would be stepping in to help,” says Mr Rosia.

Rural towns are the most affected

The Canadian Union of Public Employees points out:

• “Once international students graduate, they often continue to work in the communities where they studied, through the Post-Graduate Work Permit program (PGWP) or Provincial Nominee Program (PNP).
• Small and rural communities tend to rely on newcomers and migrant workers more than urban centres to fill workforce gaps, especially in care work, as rural communities are aging faster.
• Small and rural communities also rely more on post-secondary campuses as economic anchor institutions. Beyond the direct jobs that campuses bring to a community, students and staff spend money in the local community, supporting small businesses, housing, and other services; sporting and artistic activities bring a sense of pride; and often campuses offer opportunities for partnerships between local industries and researchers.”

The Tyee newspaper provided a real-life example of the link between higher education access and rural economic health in its April 2025 interview with Coralee Oakes, former British Columbia shadow minister for postsecondary education. Ms Oakes called higher education institutions “the hub of the wheel for small communities struggling with everything from health care to jobs to mental health and addiction."

She told The Tyee that having a College of New Caledonia satellite campus in her hometown of Quesnel has been integral to sustaining local health care:

“If we didn’t have the health-care training at our local college, we wouldn’t have a hospital that’s functioning. We can’t recruit our way into filling these gaps.”

Geoff Dawe, national president of the Public and Private Workers of Canada, or PPWC, a union representing support staff at Selkirk College in British Columbia's southern interior region, also spoke with The Tyee and made this point:

"We need to make sure that our rural communities stay strong, viable, economical places to raise kids and grow. [Because of international tuition losses affecting the community], people are going to go to different communities or bigger cities where they will offer these programmes.”

Suffice to say, this will run counter to the federal government's stated intention to draw more skilled migrants to rural communities.

The third year of the cap

Despite business and education stakeholders’ concerns about the sweeping impacts of the cap, Canadian Prime Minister Mark Carney announced this fall that a maximum of 155,000 study permits will be issued in 2026. For reasons including plummeting international student demand and high visa rejection rates, this total will almost certainly not be met.

Data provided to ICEF Monitor by IRCC shows that the total number of new study permits issued in 2024 was 267,890 – a roughly -48% reduction from 2023 levels and nearly 100,000 study permits below the official IRCC target.

What’s more, 2025 was the second year in which Canada’s colleges, universities, and economy have seen far fewer new international students than could be accommodated under the enrolment cap. IRCC data indicates the department processed only 104,980 study permit applications for new students (as opposed to renewals for continuing students) between January and June 2025. Of those, only 31,580 were approved (an approval rate of just over 30%). This compares to the 223,551 new study permit applications processed during the same period in 2024. Of those, 113,368 were approved (a 51% approval rate).

While full-year numbers are not yet available for 2025, the projection is that Canada will approve only about 80,000 new study permits – more than 230,000 below the cap for this year. If that projection holds, that will be the lowest volume of new study permits issued in a decade, and it will fall below even the 2020 COVID level.

Gabriel Miller, president of Universities Canada, sums it up this way: “The challenge here was always to lower numbers in a smart way. It’s a bit like they decided to go on a diet and they stopped eating vegetables.”

The diet is certainly extreme, and its continuing impacts – on students, communities, postsecondary institutions, and the Canadian economy – will only become more apparent in 2026.

For additional background, please see:

• "Canada announces new incentives for international recruitment of master’s and PhD students"
• "Canada cuts foreign enrolment cap by nearly 50% as current year trends below COVID levels"
• "Canada: Study permit numbers are in steep decline in 2025"
• "Measuring the impacts of the first full year of Canada’s foreign student enrolment cap"