AUSTRALIA'S private vocational college sector faces a fresh spate of closures as Indian demand dries up, hit by a visa crackdown, fallout from assaults and the exposure of dodgy colleges.

New Delhi upped the ante this week after the murder of 21-year-old accounting graduate Nitin Garg in Melbourne on Saturday.

According to industry consultant Graham Eddy, the February intake of Indian students - our second largest market among private colleges in Melbourne will be down about 60 per cent. He expects some small operators, even some larger ones, will be forced to close.

The warning comes as the university sector was encouraged by signs that markets other than India, such as the largest China, are showing signs of resilience.

Indeed, the public sector is likely to benefit from a series of private college collapses last year, and immigration changes giving priority to skills needing a university degree, persuading students to turn to universities and the TAFE sector.

Mr Eddy yesterday said that Chinese students in particular were switching to the public sector. "Some of the smaller colleges that don't manage their finances correctly will just run out of money," he said.

The private sector is rife with daily rumours of looming bankruptcies. While Mr Eddy believes some colleges with between 150 and 500 students will be forced to close, a few with enrolments of over 1000 may also have to shut.

Australian Council for Private Education and Training chief executive Andrew Smith noted some colleges were already laying off staff.

Indian Foreign Minister S.M. Krishna called on students to be more "discreet" in choosing where to enrol - an apparent reference to vocational courses geared to gain migration points.

"Australia doesn't need to teach us about facials, hair styling and various other things," he said.

According to Immigration figures, student visa applications from India slumped by 29 per cent in July-October. The drop among offshore applicants was 46 per cent, partly driven by the visa crackdown. But all applications from China were up 6 per cent, while those lodged offshore were flat.

Universities Australia chief executive Glenn Withers said while the vocational sector had been hit hard by the crackdown, safety appeared to be driving the steep drop in demand from India for the university sector.

The number of higher education visas granted to Indians in July-October slumped by 9000 a year ago to 4155, with just 493 visa refusals. That compared with 6400 Indian applications being refused in the private sector, a refusal rate of 40 per cent.