Escalating restrictions on overseas students could harm Australian universities financially, sector representatives have warned, as political parties duel over migration policy.

Prime minister Anthony Albanese says foreign students are being enmeshed in efforts to reduce net overseas migration, after updated Treasury forecasts – revealed in the 12 May federal budget – showed that the government expects to overshoot its previous projections by 55,000.

Albanese said his Labor government had already reduced net migration by 45 per cent after it “inherited” high migration from its coalition predecessors. “We’ve been working on…getting those numbers down,” he told ABC TV.

“There’s a range of measures in the budget…that you’ll see come out over a period of time. We’re already changing, for example, the way that we’re dealing with students. There is more work to do and we’re doing it.”

Opposition leader Angus Taylor promised to reduce net migration even further in his budget reply speech, while declining to specify by how much because “Labor always exceeds its immigration targets”.