UK universities risk financial instability and worsening outcomes for all students due to overreliance on international fees warns think tank.
The Social Market Foundation (SMF) says recent restrictions on international students have not addressed universities’ dependence on them for core funding.
In two reports published today, the cross-party think tank recommends ways to reduce this overreliance while maintaining the UK’s appeal to foreign students.
At present, international student fees account for 23% of English universities’ total income, forecast to rise to 28% by 2026/27.
Universities make an average profit of 31p for every pound spent teaching international students while losing 8p per pound on domestic students.
The SMF inform that government-driven reductions in postgraduate international numbers could seriously disrupt the sector, potentially leading to job losses and impacting all students’ educational experiences.
The recommendations come as universities warn of the economic impact of recent government restrictions on international students, including limits on dependants and tighter visa rules.
Jonathan Thomas, author of the Crazy for you report and Senior Fellow at Social Market Foundation told Scottish Business News: “After a surge in numbers following the pandemic reopening, the UK government has restricted most international students bringing their dependants with them when they come to study in the UK.
“The impact of this will not be clear until the start of the next academic year but, as dependant numbers accompanying those on master’s courses had risen eight-fold 2019-2022, current indicators are that alongside other factors this will have a significant impact on numbers coming to the UK this year.’
To address these issues, think tank recommends several measures. It suggests capping international student growth in areas with housing shortages.
The SMF also proposes setting targets to diversify international student intakes.
Additionally, it recommends increasing inflation-linked teaching grants to compensate universities.
Think tank also advises reforming visas to maintain UK attractiveness, including allowing instalment payments for graduate visas.
Zeki Dolen, author of the Too much of a good thing? report and Events and Communications Intern at Social Market Foundation, said: “Recent restrictions on international student migration have narrowly focused on reducing net migration, and the government has not considered the wider implications of its actions.
“After pushing universities to become overreliant on international student fees by freezing domestic fees, it has now pulled the rug from under the sector’s feet – with little direction on how it will compensate them in the future.”
“Without putting the higher education sector’s funding on a sustainable footing, efforts to address the pressures caused by the rapid increase in international student numbers risk doing more harm – to universities’ finances and to the UK’s attractiveness as a destination for study – than good.
The SMF report published today, Crazy for you, surveys the policy and political developments that have shaped the UK’s current approach to international student numbers.
It also highlights key takeaways from the Migration Advisory Committee’s recent review of the graduate route, pointing to future policy considerations.
The complementary SMF report, Too much of a good thing?, outlines strategies to manage international student numbers, aiming to reduce accommodation pressures without risking financial stability in the higher education sector.
The SMF’s reports highlight the delicate balance UK universities must strike between leveraging international student fees and maintaining accessibility for domestic students.
As the sector grapples with financial pressures and policy changes, the coming years will be crucial in determining whether a sustainable model can be achieved.
The recommendations put forth by the SMF offer a starting point for policymakers and university leaders to address these challenges, potentially reshaping the landscape of UK higher education for years to come.