Why Is IDP Education Bracing for a 30% Drop in Student Placements?
IDP Education has revised its FY25 guidance, forecasting a sharp decline in student placements and language testing volumes due to persistent immigration policy uncertainty across key markets including the UK, Australia, Canada, and the US.
- Student placement volumes expected to fall 28-30% in FY25
- Language testing volumes forecast to decline 18-20%
- Adjusted EBIT guidance lowered to $115m-$125m
- Cost control measures to reduce overheads by 5% in H2 FY25
- Ongoing review of long-term cost and investment strategies amid market challenges
Global Policy Uncertainty Hits International Education
IDP Education Limited (ASX – IEL), a global leader in international student placement and language testing services, has issued a sobering update on its market outlook for FY25. The company attributes a significant downturn in student enrolment volumes to ongoing immigration policy uncertainty and restrictive measures in its key destination markets – the United Kingdom, Australia, Canada, and the United States.
Heightened restrictions following the UK’s Immigration Policy White Paper, combined with post-election policy rigidity in Australia and Canada, have created a challenging environment. Canada, in particular, has seen a sharp decline in student demand amid volatile policy changes. The US market is also described as increasingly negative, with visa rejections rising and new government policies yet to be clarified.
Volume and Revenue Impact
As a result, IDP now expects its student placement volumes to fall by approximately 28-30% compared to FY24, while language testing volumes are forecast to decline by 18-20%. Despite these steep volume drops, the company anticipates that revenue impact will be partially offset by strong average fee growth and disciplined cost management.
Adjusted EBIT for FY25 is now projected to be in the range of $115 million to $125 million, down from previous expectations. The company has implemented cost control initiatives that are expected to reduce adjusted overhead costs by around 5% in the second half of FY25 compared to the same period last year, even as it faces negative operating leverage.
Strategic Response and Long-Term Outlook
Looking ahead, IDP is conducting a comprehensive review of its longer-term cost structure, productivity, investment priorities, and commercial levers to adapt to the protracted challenging environment. The company plans to provide an update on this strategic review alongside its FY25 results announcement in August 2025.
Despite the near-term headwinds, IDP remains confident in the structural growth drivers underpinning the international education sector. The company highlights its global scale, unique service offerings, and robust balance sheet as key strengths that position it well to navigate current uncertainties and capture growth when market conditions improve.
Investment in digital and AI-enabled product development remains a priority, though the pace and scale of these initiatives will be adjusted to reflect market realities. IDP’s leadership emphasizes a disciplined approach to costs aligned with short-term conditions, balanced with a focus on innovation and quality to maintain and grow market share.
Market Context and Policy Challenges
The update underscores the significant impact of immigration policy volatility on international student flows. The UK’s proposed tightening of visa rules, including increased salary thresholds and reduced post-study work rights, alongside Canada’s reduced student caps and restricted spousal work permits, have dampened demand. The US has seen increased visa rejections and a pause in new visa appointments, further complicating the outlook.
Economic uncertainty and negative rhetoric towards international students have also contributed to a subdued environment. While elections in key markets have concluded, policy clarity and stability remain elusive, prolonging the sector’s challenges.
Bottom Line?
IDP’s cautious guidance and strategic recalibration highlight the fragile state of international education amid policy headwinds, setting the stage for a critical FY25 results reveal.
Questions in the middle?
- How will IDP’s long-term cost and investment review reshape its growth strategy?
- What specific digital and AI innovations will IDP prioritize to regain market momentum?
- How might evolving immigration policies in key markets impact FY26 and beyond?