The crash comes on the heels of the hot debate over migration prompting Labor, the coalition and One Nation to narrow the gangway for foreigners wanting to study in Australia.
Labor will stop higher education entrants from overseas bringing along their families and ensure they can only move between institutions if they're pursuing a higher-level qualification, under measures Immigration Minister Tony Burke announced in August.
New figures from IDP Education, a migration agent, showed less than one in four prospective students put Australia top of their list of potential destinations, down from more than one in three six months ago.
The US, UK and Canada all became more attractive over the same period, hamstringing Australia in a much more fearsome competition for the world's best minds.
Constant chopping and changing of visa rules and fiddling with planning levels had made prospective students take notice.
"The world's best students have got so much choice," IDP's chief partner officer Simon Emmett told AAP.
"Once you've got that uncertainty, the shift to other destinations is something that's difficult to switch back on."
Australia is still considered as a destination by a world-leading 54 per cent of prospective students, IDP found, but that was down five per cent and possibly about to be overtaken by a surging UK.
In July, the cost of a student visa jumped to $2500 for undergraduates and $5750 for postgraduates, making Australia the world's most expensive destination.
Australia's visa refusal rate had the previous month also climbed to a 10-year high of 24.6 per cent, up from just 7.9 per cent a decade prior.
Mr Emmett said Canada, where international enrolments dived 29 per cent after a massive crackdown, should serve as a warning to other countries wanting to lower their migration intake by cutting foreign students.
"We need to be really careful we don't overcorrect on student policies," he said.
"You can make decisions that impact visa decisions now, but it's the prospective students who you'll also impact ... students consider destinations over a long period."
Students already in Australia were also finding life trickier, IDP's report found.
Almost half said finding part-time or post-graduate work was harder or much harder than expected, and more than one in three had trouble with the cost of living.
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