Government and higher education figures are concerned the integrity of Australia's immigration system is at risk, as a rush of fraudulent visa applications forces universities to crack down on international students from some Indian states.
International Education Association of Australia chief executive Phil Honeywood told the inquiry the problem goes beyond students originating in India, with exploitation of students from Nepal and other south Asian nations rife in the sector.
Applicants are being funnelled into the education system by overseas agents because student visas are seen as an easy pathway to access work rights in Australia, the inquiry heard.
Mr Honeywood, a former Victorian education minister, said the federal government's decision to scrap maximum work hours for people on student visas caused numbers of non-genuine applicants to balloon.
"It's become a ponzi scheme which is attracting the wrong motivation for young people," Mr Honeywood said.
Education agencies, which help recruit prospective international students in exchange for commissions, have been accused of engaging in misleading conduct to attract more applicants.
The problem is not unique to Australia.
Canada's border security agency expelled more than 150 Indian students for entering the country on forged college admission letters last month.
The students claimed to have been duped by an immigration consultation agency in India that provided them with the forgeries.
Not only are international students being sold courses they are not suited for, but there are also concerns they are being exploited in the workforce.
Students locked in "monocultural bubbles" are frequently deprived of award wages by employers who exploit the students' lack of knowledge with local work requirements, Mr Honeywood said.
He posited the recent surge in students from Nepal, which has overtaken India to be the second largest student source in NSW, was a result of uncapped work rights driving them to Australia ahead of rivals such as Canada, the UK and the USA.
Since the re-opening of borders to international students after the COVID-19 pandemic, applications have rebounded faster than expected.
Applications from Indian students are expected to exceed pre-pandemic highs of 75,000 after Prime Minister Anthony Albanese and Indian counterpart Narendra Modi signed a wide-ranging agreement making it easier for citizens to travel and study between the two countries.
An investigation by The Age and The Sydney Morning Herald found five universities - Victoria University, Edith Cowan University, the University of Wollongong, Torrens University, and agents working for Southern Cross University - are putting in place bans on Indian students to pre-empt greater restrictions being imposed by the Home Affairs Department.
In February, Home Affairs rejected 94 per cent of applications from India to study in Australia's vocational sector, compared to less than one per cent of student applications from countries including the US, the UK and France.
