FOREIGN students should be given a special visa and taken out of the immigration statistics.

This would quarantine education from the overheated politics of population, according to University of NSW chief Fred Hilmer.

The visa would allow a student to stay for a qualification plus two to three years' work experience in a related field.

Any request to migrate would be dealt with separately in the immigration system.

"But you don't count those [students] as immigrants, they're not entitled to be immigrants. It will dissociate study from immigration, it will depoliticise it," he said.

Students visas bring no entitlement to migrate but, beginning in 2001, policy helped create an industry based on qualifications that led to skilled migration.

Professor Hilmer was commenting on Monash University's emergence as the first Group of Eight institution to announce budget cuts to make up for sharp declines in overseas student income.

Monash vice-chancellor Ed Byrne said Monash College, the source of half the overseas students who end up in the business faculty, had suffered a 30 per cent fall in numbers.

The export education industry has been affected by bad publicity from attacks on Indian students, a move by policy-makers to weaken the link between education and migration, the high Australian dollar and fresh competition from cash-strapped institutions in the US and Britain.

Professor Hilmer, in the same way as Professor Byrne, identified onerous visa conditions, especially the requirement to show a hefty bank balance against course fees and living costs, as a big disadvantage in a competitive market.

The University of Melbourne's chief Glyn Davis also has urged the creation of a new student visa.

"We don't have in this country a separate student visa, as many countries do," he said.

He hoped the misfortune of Monash would prompt a reconsideration of visa policy.

Victorian dual-sector universities all said they were keeping a close eye on the situation. They expected demand to be soft, but none anticipated a similar impact to Monash.

Additional reporting: Pia Akerman