Student Visas, Agents and Commissions

This article is going to potentially ruffle a few feathers, and before I launch in to the details, I will add this is very much an opinion piece, which I know people will have counter-opinions on. I do however believe that it is a subject worth discussing because it impacts on a significant number of migrants, all of whom are sacrificing substantial amounts of money and time, in to pursuing a dream to study in NZ, that is often being misrepresented, manipulated or simply exploited for sake of lining a few peoples pockets.

Actually, when it comes to those pockets being lined, it would be more accurate to say that there is a river of money flowing, between New Zealand based tertiary institutions and so called “Student Visa Agents” in commissions, which are really nothing more than kick-backs for these individuals steering people to take on particular courses (usually the ones where the kick backs are more lucrative).

In addition to this, the industry surrounding these Student Visa programs (and it is an industry of its own) has spawned so called “accreditation agencies” claiming to hold out as providing some sort of more secure or robust process, enabling the creators of said agencies to leverage higher commissions or duping applicants in to thinking their interests are somehow more protected. Add to that, the lack of regulation in terms of people providing advice on Student Visas, the whole thing has me bothered and bothered for good reason.

Agents & Commissions

The education sector in New Zealand has relied on the in-flow of international students for decades, partly because of the gap in funding provided by the State, partly because of reducing domestic enrolments but also because it is enormously lucrative. When you are charging the full fee for someone to come and attend your lectures, there is a very healthy margin built in. To be fair, we offer a really good proposition for international students, with some highly ranked Universities, a wide variety of course offerings and the lifestyle that many applicants are looking for. Add to that, the potential for post-study Work Visas, which can potentially lead on to Residence options for those applicants, there is a lot to promote.

However within all of this an industry has grown and grown rapidly, which consists of people who make a living out of promoting certain institutions in certain markets and in return those institutions provide those people (referred to as “agents”) with a commission on the fee that the student will pay. Various education providers have very complex and sophisticated agreements with these agents, and the commissions can be quite substantial (30% to 40% of the first year fee isn’t unheard of). In many cases these agents are encouraged to work exclusively with one or a small group of providers or because of the range of commissions available, these agents tend to stick with the institution that pays the highest returns.

Therein lies the first issue. Given the increasingly competitive market for international students, and the varying degrees of financial incentives being offered to these agents, there is a built-in bias towards providers that pay the most. Whilst some students are clear on what and where they want to study, so the agent is simply a step in the process that they have already established, there are a lot of applicants who see the Student Visa pathway as a means to stay in NZ longer-term. For them, the potential to be persuaded into a course that may not actually be the best solution is far higher.

In many cases the commissions on the first years fee are much higher than subsequent years, so agents are often encouraging applicants to change providers each year, in a means to increase their financial gain - however that may not necessarily be in the student’s best interests and almost always creates problems at the visa stage.

In any situation like this there are of course good agents who genuinely do focus on the applicants best study pathway, however there is far more evidence to suggest that a greater number of these agents are less concerned about the applicant’s longer-term goals and more focused on the short term gains.

This industry has, in my view, been left unchecked for far too long and its not just the agents that need to be taken a closer look at. The institutions themselves, including some of our larger tertiary providers should be reviewed to establish whether their incentives schemes are working in the best interests of applicants or simply the best attempt at mass marketing.

Accrediting Bodies

Alongside the education agent industry, we have also seen the rise of various “accrediting bodies” who proclaim to have some sort of special status within the industry. The suggestion is that they offer some sort of preferential treatment, perhaps reduced fees or rebates on tuition costs, or worse that they are somehow superior in their ability to select courses and secure visas than everyone else.

In reality, they are simply agents who have crafted a nice set of marketing tools, slapped a lovely gold badge on everything and set themselves up as being a cut-above the rest. Snake oil used to be sold in the same way, just without the social media.

There is little to no oversight of these independent agencies, which essentially means they aren’t worth the digital paper they are written on and yet they are allowed to market anywhere and everywhere, often using very targeted campaigns to zero in on applicants that they know are desperate to make the move - not necessarily to study, but to secure a longer term future here. And that is really where the wheels come off.

For many potential Student Visa applicants, the sacrifices made to pursue this pathway are enormous. Family homes are sold to pay for the fees and living costs, which ultimately is done, in the hope that the applicant may be able to forge a path to Residence here, and then later support the family to follow. Unfortunately many of these agents and agencies understand this, and the utter desperation involved and sell the dream accordingly. The courses promoted might just meet the budget, but often take no account of the other requirements to secure Residence or offer no viable pathway at all.

The entire premise of "accredited education agents" is, in my view, a complete nonsense and if the Government were focused on sorting out migrant exploitation, this would be one of the areas they could hone in on. I am not against the sector having some sort of accreditation status or even having some sort of financial incentive for referrals, but it needs to better regulated, monitored and controlled - something that leads to the third point below.

Unlicensed Chaos

Now we come to the biggest hole in the system, which is the lack of regulation or licensing for these so called education agents. There is no specific regulatory scheme that applies to people providing advice as an education agent (or counsellor for those that like to dress it up a little) and so they can recommend courses and engage students with providers without any consequence. However providing immigration advice to that student does require a license (such as the one I have and maintain). The issue is, that most of these education agents, will still provide advice, without a license, skirting around the edges of what they would claim is “publicly available information”.

Given the IAA has no practical ability to enforce the licensing regime or penalties in offshore market places, most of these unlicensed education agents carry on dispensing immigration advice with out any fear of being caught out. And if you are advising an applicant on which course to take, that might then lead them to a Work Visa or Residence, you are absolutely crossing the line between “publicly available information” and providing formal advice. The real danger is that most of these education agents have only a very basic grasp of one visa category (Student Visas) and have no meaningful understanding of how various visas fit together, or how a person might qualify for further visas down the line.

Of course there are licensed advisers who do know the broader set of rules and who can connect the dots between courses, visas and a longer term pathway, however the challenge there is finding one who isn’t being motivated by the hefty commissions they might get if they refer an applicant to a particular provider.

There are good eggs in this basket, and there are advisers and even some agents who genuinely add value to the process, but for every one of those, there are plenty more who don’t and for that reason, this particular part of the industry needs tidying up.

Time For A Change?

If you haven’t already gathered by now, I am no fan of how the international education sector works, largely because any process with so much at stake for the applicant, and money changing hands behinds their backs, gives me cause for concern. I am not necessarily against financial incentives but I am vehemently against a lack of regulation, that enables this industry to self-promote and in some cases lead applicants down very expensive paths to nowhere.

Ironically our own Government has been a party to this problem, because in previous years, the push to drive this marketplace, given its ability to generate billions in revenue domestically lead to visa incentives for applicants that were unsustainable. Come and spend your money here in our education sector, to then eventually secure a Work Visa, with the hopes of Residence. There were so many of them at one stage, it prompted the Government rework the Skilled Migrant Category to avoid the country being overrun with low-skilled applicants who had all completed basic diploma level courses.

That lure of financial rewards lead previous Governments in to a visa processing nightmare that had to be fixed, and yet the same financial incentives continue to be used by agents to steer some applicants down entirely the wrong path.

The sector needs to be regulated and not by itself. There needs to be consequences for those who work in this space, and reap the benefits at the expense of applicants. I would suggest that the IAA could play a part here, in requiring those unlicensed agents to become licensed. The industry should have limits imposed on the financial rewards that are on offer and there should be significant penalties for agents that get it wrong.

My advice to anyone considering the student visa pathway to New Zealand is not to avoid using an agent, but to understand what might be motivating them as they recommend a particular course and if they are not a licensed adviser, to use them only for the course selection. Be wary of anyone promoting themselves as “accredited” and if your studies are a potential pathway to a longer-term future here, get unbiased, independent advice from someone who knows what they are doing.

All too often we see people who have been sold a study pathway, invested the money, only to find out too late, that their plans to stay here are non-existent. Some good advice upfront, that isn’t being fueled by a hefty kickback is a good start.

Until next week!

Turner Hopkins Immigration Specialists