About a fifth of private colleges aim to give international students a visa, not an education, the author of a new report into the $17 billion sector says.
Federal Education Minister Julia Gillard asked former Liberal MP Bruce Baird to review Australia's third largest export industry in August.
The sector has been beset by attacks on international students - especially Indians - and claims that some education providers were exploiting foreigners.
Mr Baird released his report into the regulations surrounding international education in Canberra on Tuesday.
It found tougher registration criteria for providers and stronger protections for students were needed to shore up the sector's long-term sustainability.
Mr Baird said the industry had been significantly "distorted" by unscrupulous providers cashing in on foreigners' desire to live in Australia.
"We have permanent residency factories, (and) if you ask any of the good providers they'll quickly name those who they believe are the dodgy operators rorting the system," he told reporters.
Clear, enforceable standards
"It is those groups that we should be directing our attention to. I certainly think that they represent... about 20 per cent of the vocational sector."
Mr Baird wants only tertiary providers with a sound business model and the capacity to uphold Australia's reputation for quality education to be registered.
The report's recommendations call for the development of clear, enforceable standards, and fines for non-compliance.
"High-risk applicants ... won't be allowed in," he said. "If they are medium- to lower-risk, they would have to pay a higher rate of registration and they would be monitored more regularly."
Mr Baird proposed international student hubs in each state and territory to provide information and advocacy services, and suggested the federal government expand its Study in Australia website to include a manual available in major languages.
"We need to do more work in terms of social inclusion, and part of the idea of the education hubs is actually to encourage greater interaction with students and the Australian community," he said.
Skilled migration changes
Gathering comparative data on every international education provider would help students make informed choices about where they studied.
If they ran into trouble, an independent body such as the Commonwealth Ombudsman's office should step in to mediate.
Mr Baird also recommended the assurance funds designed to protect foreign students in the event of a college collapse be streamlined into a single Tuition Protection Service.
It would attempt to place students in a comparable course and give refunds only for the subjects that could not be delivered.
Ms Gillard said Labor's recent changes to the skilled migration program, which reduced the list of occupations in demand, would help weed out dodgy education providers.
"We're saying to international students, come, study in this country, it's a great place to study," she said.
"But the purpose of coming here as a student is to engage in study and end up with a qualification, not with an immigration pathway."