MELBOURNE: Australia's image as a top destination for foreign students suffered another setback yesterday after four bankrupt colleges closed, leaving nearly 3,000 students stranded.

The company that runs the four colleges - the Global Campus Management/Meridian Group - went into voluntary administration on Thursday, and its administrator Stephen Parbery said it is unlikely the group will reopen the schools.

Education is the third largest export earner behind oil and coal for Australia, which has a A$13 billion (S$16.4 billion) international student sector.

The colleges affected include Meridian International Schools, the International Design School, International College of Creative Arts and Esmod Australia.

Located in 13 campuses in Melbourne and Sydney, in the Australian states of Victoria and New South Wales respectively, they provided tuition in hospitality, design, English language, fashion and secondary education.

The decision affected about 2,700 foreign and nearly 150 Australian students, most of whom were about to sit for their exams. The foreign students are mainly from Asian countries.

Victorian and New South Wales education departments have been left to find places for many students to take their end-of-year exams, ABCnews.com reported.

'Immigration should do something for us. If the college has closed, it's not our problem,' said Melbourne-based international student Jass Sandhu, who claimed she had no contact from the school about the closure. 'We were studying well, we were paying our dues... What about our future?' she said.

Several hundred students shared her anguish as no one had told them about the closure. They arrived at the campuses yesterday morning to find the doors closed. Teachers at the colleges were told they were out of jobs last night.

Victoria state's Skills and Workforce Participation Minister Jacinta Allan said the government is reviewing legislation covering such colleges. 'The buck stops with the state regulator having oversight, and that is why we are making sure we strengthen the guidelines,' she told ABC radio. Their first priority was 'working with the students to make sure they are supported with their ongoing education'.

The issue has caused diplomatic discomfort for Australia. India's Deputy High Commissioner to Australia V.K. Sharma said an estimated 300 of the affected students were Indians and that the recent collapse of some colleges had led to a sharp fall in student arrivals from India.

He said the current shake-out of Australia's education system was necessary to restore the confidence of overseas students, a process that could take a couple of years.

The Australian Education Union said greater regulation of private colleges was needed. 'There are a growing number of private colleges collapsing and it's the students who pay the price,' said union president Angelo Gavrielatos.

'The scrutiny of new and existing operators has not been adequate to ensure that they are financially viable and delivering a quality education to international and domestic students.'