(Bloomberg) -- Canada's radical immigration experiment, which has given it one of the world's fastest rates of population growth, has run into big trouble in the ring of suburbs and small cities around Toronto. A post-pandemic surge of international students is causing prices for rental housing to soar and placing a spotlight on the uncontrolled growth of colleges that, according to the government's own immigration minister, are taking advantage of vulnerable young people with inferior academic programs. Much of the blame is falling on Prime Minister Justin Trudeau, who oversaw a tripling in the number of foreign students to more than 1 million. Today, about 1 in 40 people in the country is on a foreign-study visa.Now, the government has been forced to scale back its immigration ambitions, an acknowledgement that a system once touted as a key driver of economic growth isn't working. Faltering in polls because of frustration about housing costs, Trudeau is cracking down: Immigration Minister Marc Miller has announced a temporary limit to the number of student visas and is promising further measures soon. The goal is to gain more control over the influx of students and force the market to weed out shoddy programs by slowing the spigot of international tuition fees. “People are being exploited,” Miller said in an interview with Bloomberg. Arriving mainly from India and other parts of Asia, many students are lured by the prospect that Canadian school credentials may give them the option to stay and pursue permanent residency under the country's liberal immigration rules. For the government, the students inject tens of billions into the economy every year and provide companies with new workers in a nation with an aging native-born labor force.But the explosion in enrollment — particularly in southern Ontario, the most-densely populated region — has been so sudden that it has overwhelmed the ability of some communities to cope. It's adding pressure to living costs in cities that are already among North America's most expensive. And some of the college programs are clearly damaging Canada's reputation. “It's not the intention of this program to have sham commerce degrees or business degrees that are sitting on top of a massage parlor that someone doesn't even go to, and then they come into the province and drive an Uber,” Miller said as he announced new visa restrictions last month. The situation is souring the public on immigration. Canada's system has long enjoyed relatively high levels of public support, with little sign of the backlash that's occurred in the US and European nations where rising numbers of asylum seekers have become a central political concern. But last fall, an Environics Institute poll found that 44% of Canadians said there's too much immigration to the country, a stunning 17-point jump from the prior year – the largest change in opinion since the survey began in 1977. A policy shift that limits foreign student inflows might hurt Canada's economy over the long run. But in the short term, it may help future young immigrants avoid the fate of Sai Reddy, a student from southern India who landed at Ontario's Conestoga College in 2023 and spent months looking for a place to live, wound up in a basement apartment he can barely afford and still hasn't been able to land the part-time job he needs.“I have to cut costs and now I'm eating twice a day,” he said. “I don't have money to buy winter clothes.”Quality GapThe tension is coming to a head in places like Brampton, Ontario, a rapidly growing Toronto suburb where post-secondary institutions are more common than McDonald's outlets. That's no accident.The city of 650,000 has one of the highest concentrations of immigrants in Canada, with more than half of its residents born abroad. It's also a locus of Canada's large Indian diaspora. Strip malls are filled with Indian restaurants and grocers, where Punjabi, Gujarati and Hindi can be heard in conversations among friends and family.Brampton provides a sense of belonging to students from India, by far the largest source of applicants fueling Canada's college boom, many of whom left their country for the first time to study. Colleges see the city — once known for its greenhouse flower industry — as fertile ground to cash in on a lucrative revenue stream that helps compensate for stagnant government funding. Until last month, Canada had no limits on the number of study permits allowed, although applicants have to meet certain criteria, including proof they have at least C$20,635 (about $15,300) to begin their studies. Education standards are enforced by provincial governments that have a strong financial incentive to expand the number of international students, who pay five times the tuition of Canadian undergraduates.It's an industry that had been growing steadily, was briefly interrupted by the Covid pandemic, then exploded. For immigration consultant Sandeep Singh, they've been a boon. Students once formed a negligible share of the work of his firm, Brampton Immigration Consultancy; now they're about 90% of the business.“I've seen institutions from when they were so, so small and now they're so big,” Singh said. But “there's a gap between quantity and quality” in the schools, he said. The student surge has driven up the cost of a one-bedroom apartment in Brampton by 19% in a year, to C$2,117 per month — that's if you can find one. Rents have also skyrocketed in other Toronto suburbs. Miller's temporary visa limits mean the overall number of foreign students destined for Ontario and British Columbia, the two top provinces for foreign students, is set to drop. But the government's new measures also target one subsector of higher education that has grown like crazy: private schools that have formed alliances with public colleges that want to grow quickly.The partnerships have been crucial to the growth because in most cases, it's public institutions that are allowed to offer academic programs that make students eligible for post-graduation work permits — vital for anyone hoping to stay in Canada after they've finished school and pursue a permanent resident card.By having the imprimatur of a public college, private institutions can run programs that are more attractive to foreign students. Both sides share in the revenue. In Brampton and elsewhere, these hybrid schools have taken over office buildings and retail spaces in strip malls, turning them into classrooms. Public colleges in locations that may be less appealing to foreign students, such as Lambton College in Sarnia, Ontario, have struck deals that allow them to share in the cash coming from a wave of students who are drawn to greater Toronto. Lambton College has been “successfully working” with the provincial and federal governments on its partnerships since 2006, spokeswoman Jami Kloet said in an emailed statement. “As a leader in international programming, Lambton College can say with confidence that there is a disconnect between the current public perception and the reality of what our public college-private partnerships programs are doing.”But Miller is trying to put a stop to it, or at least slow it down. Starting in September, students in these public-private programs will no longer be eligible for the coveted post-grad work permits.For him, it's an issue of quality. Many of these private-public schools are focused on selling non-degree programs with easy or broad subjects, such as marketing and business management courses, with classes two or three days a week. They're designed to make it possible for international students — most of whom need to work to support themselves financially during their study — to spend dozens of hours a week working part-time jobs. More than 80% of foreign students are working more than 20 hours a week, after the Trudeau government raised a limit on the weekly hours foreign students could work. Miller said he plans to restrict weekly hours to less than 40, but will maintain them above 20. He said the supply of workers is a benefit to retailers, food outlets and other sectors that depend on cheap labor, but it's not in keeping with the spirit of higher education."The fly-by-night business degrees that you see,” Miller said, “those really have no reason to exist. They're not really business degrees.”Foreign students contribute more than C$22 billion to the Canadian economy each year and support some 218,000 jobs, according to the government's estimate.Not far from Brampton, in the adjoining cities of Kitchener and Waterloo, Conestoga College has become a sprawling presence, thanks to its recruitment success. Last year, it had more than 30,000 study permits approved, by far the highest number in the country and four times that of the University of Toronto. That's a 400% jump since 2018, making it one of Canada's fastest-growing higher-learning institutions.To accommodate them, the college built a makeshift structure marked “Transition Classroom Building” in one of its parking lots at its largest campus and took over most of a shopping mall and several downtown buildings. What it didn't plan for is homes. Akash Patel, who took out an education loan to fund his studies at the college, sleeps in the living room of a two-bedroom apartment that houses six people and commutes for an hour using two buses to get to class.Before Sai Reddy found a shared room in a basement closer to campus in November, he was shut out of the market, beginning the school year living with family friends about 30 miles from campus. Now living in Kitchener but still without a part-time job even after months of searching, he has to manage monthly expenses within his budget of C$730 to cover rent, cell phone bills, bus passes and food. “I'm in financial crisis right now,” he said.Conestoga “has a large team in place to help international students from the moment they begin their application process,” spokeswoman Brenda Bereczki said in an emailed statement, adding that the college has made “significant investments” in student housing over the last two years with a new property coming next year and another in 2026. “The college will continue to actively respond to the evolving needs of our student population and will continue to support them throughout their academic journey.”Colleges Ontario, an association representing the province's  24 public colleges including Conestoga and Lambton, said their international enrollment was “aligned with local demands,” according to spokeswoman Amy Dickson. “We are deeply committed to providing high-quality post-secondary education to support Ontario's labor-market needs.”To be sure, when Canada's system works as intended, the study pathway helps add young and educated workers to the country, and the points system helps the country land some of the highest-potential new immigrants. Some of the country's most successful immigrants in business and technology attended universities in Canada, including Kuwait-born Rania Llewellyn, the first woman to become chief executive officer of a large Canadian bank, and Mike Lazaridis, who dropped out just months before his graduation but later went on to create BlackBerry smartphones.“What we need to do is not blame the students but look at the system that has resulted in this situation,” said Ratna Omidvar, an Indian-born Canadian senator who is a leading voice on migration issues. “Students are both used and abused without getting the quality education you have promised them. This tarnishes our reputation. Canada needs immigrants.”Central to the rapid growth of foreign students is a network of third-party agents and consultants who work on commission to bring in as many students as possible. Gautham Kolluri saw the shift in recruitment strategy that started nearly a decade ago, when he was working as an international recruiter at a local college. Colleges began relying on the agents to court students. Thousands of agents who are doing this work haven't even visited the campuses, he said. “This has become student trafficking. It comes to a point where they don't really care which program they're going to,” said Kolluri, who now owns education consulting firm, CIP Study Abroad, with offices in countries including India, the Philippines and Brazil. The government “didn't expect, and had not prepared for, the infrastructure and housing crisis.”Even in more remote parts of Canada that receive fewer foreign students, the growth in enrollment sometimes outpaces the capacity to absorb them. Sydney, Nova Scotia, one of the most easterly cities in North America, is home to about 30,000 people. Many of the region's traditional industries, from coal mining to steelmaking, have been in decline for decades. But Cape Breton University is a source of growth. The university charges relatively cheaper tuition fees, while Sydney has a lower cost of living compared to larger cities – both are draws for foreign students. Some students also said it's an easier university to get into. After the start of the fall semester in September, scores of international students took to the streets of downtown, looking for work to help pay their bills. Some businesses received so many resumes they put up signs saying no new ones would be accepted. When retailers or restaurants had openings, hundreds applied. At the Hallmark store, manager Tasha Myers received about 10 to 15 resumes from students per day, forming a thick pile in a red envelope on her counter. “Yesterday, we had at least 12 students before noon looking for literally anything. They say, ‘Just give me three or five hours a week' or ‘I'll wash the toilets,'” she said. “They're desperate at this point.” Cape Breton University is in discussions with Canada Mortgage & Housing Corp. and Nova Scotia's provincial government regarding “the largest affordable housing development outside of any major city in the Atlantic provinces,” according to an email from spokeswoman Lenore Parsley. “The university has been pursuing this development for the last four years — affordable housing that is urgently needed for the community.”Cape Breton student Ravneet Singh can only agree. The housing situation is Sydney forced him to take extreme measures — he lives instead in Halifax, Nova Scotia's capital and largest city, where he shares a two-bedroom apartment with his sister and works as a security guard at a grocery store. The distance to the university, where he's studying government management, is about 250 miles, slightly farther than the distance between New York and Washington. On Wednesday, he has to leave home just after 3:00 a.m. to be in class at 8:45 a.m. And he's not the only one. There are Facebook Messenger and WhatsApp chat groups with hundreds of members dedicated to students arranging their journeys each day.“After coming to Canada, I don't think it's worth it. It's better in our home country,” said Singh, from Punjab, India. But he said that he couldn't give up on his goal of living in Canada because he had already spent a lot of money.“Expenses are getting higher, everything is getting more expensive. It's so messed up. If I had known the ground reality, I wouldn't have come.” --With assistance from Brendan Walsh, Kara Wetzel and Erik Hertzberg.(Adds additional information on apartment rents. An earlier version was corrected to fix currency on Brampton rents in the 16th paragraph.)More stories like this are available on bloomberg.com©2024 Bloomberg L.P.