(Bloomberg) -- Canada is limiting a key source of its growing population by capping the number of foreign students, a move aimed at quelling public anger at Prime Minister Justin Trudeau’s government over a housing shortage.

The federal government on Monday set an intake cap for international student permits at about 360,000 for 2024, or a decrease of 35% from last year, according to Immigration Minister Marc Miller. The cap will remain in place for two years, with the 2025 limit to be reassessed at the end of this year. 

The number of foreign students in Canada tripled in a decade to more than one million in 2023. The new measures are aimed at curbing that growth, especially in colleges that Miller has accused of churning out bogus diplomas like “puppy mills.” Students in master’s and post-doctoral programs aren’t included in the cap. 

“It’s a bit of a mess. It’s time to rein it in,” Miller told reporters in Montreal. “It’s not the intention of this program to have sham commerce degrees or business degrees that are sitting on top of a massage parlor that someone doesn’t even go to and then they come into the province and drive an Uber.” 

Miller said the cap will be distributed fairly among the provinces and territories, weighted by population, resulting in more significant decreases in jurisdictions where foreign-student numbers have exploded. His office has previously pointed to Ontario — where more than half of the one million visa-holders are based — as well as Nova Scotia and British Columbia as jurisdictions with unsustainable growth.

He also took aim at public colleges that have partnered with private institutions to establish satellite campuses in strip malls or temporary buildings, drawing huge numbers of foreign students. These programs have been eligible for post-graduate work permits, which private colleges generally can’t offer and are a crucial step on the path to permanent residency.

Miller moved on Monday to close this loophole. Starting Sept. 1, students in these public-private programs will no longer be eligible for a post-graduate work permit.

Further, in the weeks ahead, only spouses of international students in master’s and doctoral programs will be eligible for open work permits. That means spouses of foreign students in other levels of study won’t be allowed to work. Overall, these new measures make it far less attractive for foreigners to attend college diploma programs.

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“It’s the single biggest thing that we can do immediately to address the housing crisis,” said Mike Moffatt, senior policy director at the Smart Prosperity Institute and a former economic adviser to Trudeau from 2013 to 2015. “We will first of all see easing pressure on the rental market. But what we’ll also see is an overnight investor say, you know what, the student market doesn’t look as attractive as it did.” 

Miller’s announcement comes after months of pressure on Trudeau’s government to take stronger action against colleges that are believed to be exploiting foreign students, who are charged an average of five times as much as Canadians. Provinces and territories will be responsible for distributing the allocated permits among institutions, meaning they’ll face added incentive to prioritize high-quality schools.

Post-secondary institutions have increasingly relied on tuition fees as provincial funding as a share of revenue has declined from 42% in 2001 to 35% in 2022. Ontario, Canada’s most populous province, has also frozen tuition fees that can be charged to Canadians for the past few years. In 2019 to 2020, foreigners paid 37% of tuition at Canada’s universities, while in 2021 those students paid an estimated 68% of tuition at Ontario’s colleges.

Universities Canada said in a statement it was concerned that the cap would “add stress on an already stressed system.” A requirement for each permit application to contain a letter of attestation from a province or territory may significantly affect processing times and lead to students choosing to pursue their schooling in other countries, it warned.

Ontario’s Colleges and Universities Minister Jill Dunlop said her government knows some bad actors are taking advantage of foreign students with false promises of guaranteed jobs and citizenship. “We’ve been engaging with the federal government on ways to crack down on these practices, like predatory recruitment.”

Miller has already pledged a designated-institution framework that will prioritize visas for post-secondary schools that provide higher quality education and adequate supports, including housing, which would come into effect this fall. He has also doubled the financial requirements for new study permit applicants. 

International education contributes more than C$22 billion ($16.4 billion) to the Canadian economy annually and supports more than 200,000 jobs, according to Miller’s office. But the influx of foreign students has aggravated housing shortages, leaving many without proper accommodation and fueling a backlash against high immigration in the typically newcomer-friendly country.

“To be absolutely clear, these measures are not against individual international students,” Miller said. “They’re to ensure that as future students arrive in Canada, they receive the quality of education that they sign up for and the hope that they were provided in their home country.”

(Adds reaction from Ontario government, Universities Canada.)

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