Data showing that the vast majority of visa applications linked to vocational colleges are rejected if they are lodged from overseas but approved if the student is already in Australia has exposed a loophole that experts say threatens the reputation of the $40 billion international education sector.

India has by far the highest rejection rate for applications offshore, sitting at 93.8 per cent. However, Indians who applied for the same visa while already in the country have an approval rate of 97 per cent, government data show.