TENS of thousands of overseas students studying expensive courses in Australia in the hope of securing permanent residency could be sent home empty-handed under changes being considered by the Federal Government.
The Herald has obtained a document prepared by the Immigration Department recommending changes ''in the relationship between the lodgement of an application and the legal obligation to grant a visa''.
This means immigrants who have met the demands of the current system and would be automatically accepted could be arbitrarily refused.
''This is going to spark mass panic,'' Karl Konrad, a migration agent who has seen the document, said.
Such changes could affect anyone seeking to gain permanent residency through the skilled migration program, but would have the gravest effect on students who have spent thousands of dollars and years of their lives on courses here on the presumption they would secure residency.
There are 137,000 such students here waiting on approval who could have the rug pulled from under them if the changes are made retrospective.
''The Australian Government has grown fat off these students with the lure that they can get permanent residency,'' Mr Konrad said.
It is understood the Migration Institute of Australia was to have been briefed by the Government but that the meeting had been delayed until next week.
The chief executive of the Australian Council for Private Education and Training, Andrew Smith, said such a change would immediately cut the number of students coming into Australia.
''[Schools] have taken deposits, hired teachers, set up classes … there would be a considerable commercial impact,'' he said.
Mr Smith said the Government had created the expectation among foreign students that they could achieve permanent residency through study and had a responsibility to them as a result.
A spokesman for the department said the document was part of a consultation process and no decision would be made on the changes until next year.
The document also outlines recommendations to reduce the number of unsponsored skilled migrants accepted, but making it easier for 457 business visa holders to become permanent residents.
It notes ''perverse outcomes'' in the system that make it easier for a hairdresser to achieve permanency than a scientist. It noted that ''integrity measures'' in the skilled migration program needed review.
Australia's $16 billion overseas student industry has been plagued with controversy over the past 12 months, with students demanding action from police over allegedly racially motivated attacks and appealing to the Government to better regulate the private colleges.
This year more than a dozen schools have collapsed, leaving students out of pocket and uncertain over their immigration status.