Visas for Australian university study have become harder than ever to obtain, with over 40 per cent of candidates knocked back during the most recently reported processing period.

Just 59 per cent of the higher education visa applications that were handled in March after being submitted offshore were approved by Department of Home Affairs (DHA) officials.

The figure represents the worst monthly grant rate on record, a full eight percentage points less than the previous record posted just a month earlier. Applicants from Australia’s second and third biggest source countries for higher education students – India and Nepal – were more likely to be rejected than accepted, with grant rates of 49 per cent and 27 per cent respectively.

University and college administrators are struggling to understand why so many would-be students are being denied entry into Australia, and why the grant rates have deteriorated so quickly in a period that has seen no significant changes to visa policies or eligibility criteria.

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Phil Honeywood, chief executive of the International Education Association of Australia, said the government needed to explain whether it was turning the “visa tap” down “across the board”.

He said the department had begun using a two-year-old policy called “”, which includes clauses about applicants’ economic circumstances, to make “holistic financial assessments” of their capacity to cover their living costs for the entire duration of their studies.

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Visa eligibility criteria only require applicants to demonstrate that they have enough funds to pay their way for a year. “All the sector wants from government is clarity as to how existing and new policy levers are being applied,” Honeywood said.

In January, the DHA that financial capacity was one of the “key refusal drivers” for visa applications from South Asia. Staff were scrutinising whether applicants had “genuine access to funds”, particularly if they had “large loans with limited capacity for repayments”.

Jon Chew, chief insights officer with Navitas, said immigration officers were accustomed to checking for fraud in financial documentation, but “second guessing” the lending decisions of overseas banks was a new development. Tests the department had used for years to assess students’ genuineness were “being applied in a very new way”.

Chew said that when visa rejections had skyrocketed in the past, the department had explained the reasons in “clear” refusal letters, and students, agents and institutions had changed their behaviour accordingly. “The problem…this time around is we’re none the wiser as to why,” he said.

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“How do you recruit the kinds of students that DHA would approve of if you don’t know what they’re looking for? We can’t introduce better compliance [or] more aggressive screening. That self-policing just isn’t there. The students themselves can’t decide if they are good or bad applicants.”

Chew said the approach risked undermining the government’s stated intent to attract quality recruits. He said “high calibre” students faced with a 40 per cent chance of being denied visas, and no clear way of improving those odds, would simply go somewhere else. “They don’t want the black mark of an Australian DHA refusal on their record, because that affects their chances of applying to the UK, Canada and elsewhere,” he noted.

But people planning to use student visas as back-door work permits might be more willing to take a “punt”, Chew warned. “[We] could end up in this very perverse situation where, because of the lack of information [or] reasoning around refusals, the good students are deterred and the ‘bad’ ones are not.”

john.ross@timeshighereducation.com