A LONG-ANTICIPATED shake-up of the skilled migration system has split the $16.5 billion international education industry, with private colleges warning of catastrophe and universities praising the priority that the smartest will receive for permanent residency.

The Minister for Immigration, Chris Evans, yesterday announced an overhaul of a system that had virtually guaranteed permanent residency to foreign students of certain trade courses.

Under the existing system the number of foreign students studying in Australia reached 580,000 last year, an increase of 95 per cent over five years.

The changes will streamline the list of jobs and areas of study used to select migrants, with a more targeted list to be implemented by July.

Priority will be given to skilled migrants who have a job lined up with an Australian employer, and potential new Australians will need to have better English language skills. Some 20,000 prospective migrants who lodged applications before September 2007 will have these cancelled and their fees refunded at a cost of about $14 million.

The government's decision to dump 20,000 visa applications received widespread coverage in the Indian media yesterday.

An agent in New Delhi, Inder Panjwani, said the decision had shattered the hopes of many and he warned of ''repercussions''.

''Some applicants have sold their houses and closed their businesses in anticipation,'' he said. ''This is a major setback.''

Another agent in Delhi, Bubbly Johar, said the visa changes could stoke further resentment following recent attacks on Indian students. ''It will add to frustration with Australia,'' he said. ''The repercussions will be bad here.''

Senator Evans said the changes would make ''a permanent difference so that Australia is able to choose who migrates to this country, based on whether they are going to make a contribution. If they don't have the English language skills, don't have the trade skills and can't get a job, then really, they shouldn't be eligible for permanent residency.''

The Herald has highlighted widespread rorting of the visa system, including private colleges charging students fees of more than $20,000 a year to do courses that cost Australian students only hundreds of dollars.

Senator Evans said the ''perverse'' points system rating a hospitality or hairdressing graduate from an Australian college above a Rhodes scholar would be reviewed.

Yesterday, tutors in private colleges teetering on collapse said they feared for their jobs. One hairdressing college in Sydney said enrolments for a $25,000 course could decline by half.

''There's going to be a catastrophic effect on the employment of Australian workers,'' a college spokesman said. Universities Australia said the changes would encourage the migration of highly qualified people and reduce their waiting times. The migration reforms would encourage the best and brightest, the group's chief executive, Dr Glenn Withers, said.

The deputy vice-chancellor of Macquarie University, Caroline Trotman, welcomed the changes.

''The reputation of universities overseas was damaged by association with the shonky operators in the vocational sector,'' Ms Trotman said.

But in Parliament, the policy was attacked by the opposition immigration spokesman, Scott Morrison. "The government is playing musical chairs with skilled migration,'' he said. He called on the government to commit to the same proportion of skilled workers in Australia's annual intake of migrants.

（www.eduwo.com, Anna）