Recent restrictions to international students coming to the UK haven’t addressed universities’ dependence on them for core funding, and risk worsening outcomes for all students, think tank says.
In two complementary papers (see notes) out today, the Social Market Foundation – a cross-party think tank – has laid out recommendations for managing the challenges of international student numbers and for reducing UK universities’ overreliance on them for their funding. The recommendations aim to do this while maintaining the UK’s attractiveness to prospective students, given the backdrop of recent changes in student immigration policy.
The reports come at a time when the university sector have been warning of the impact – to them and to the UK economy – following the recent government restrictions on international students (see notes). Since the cap on UK undergraduate fees has not been raised in line with inflation, universities have been increasingly reliant on international students to cover their costs.
International student fees currently make up 23% of English universities total income, forecast to rise to 28% by 2026/27. At the same time, international student numbers grew 37% following the student visa reforms of 2019. Universities level of financial risk is illustrated by the fact that they make on average 31p for every pound spent on teaching international students, whist domestic teaching makes an 8p loss for every pound spent.
This means that the reductions in post-graduate international student numbers that the government is trying to achieve (and has achieved as MAC suggests) could put universities in dire straits financially, and seriously disrupt the sector, potentially resulting in job losses and damaging all students’ educational experience.
But concern for universities’ financial predicament is at odds with issues that have arisen as a result of fast-growing numbers of international students. These include pressures on student accommodation. The same period since 2020 that has seen a dramatic expansion in international student numbers has seen a decline in student housing provided by local landlords and in the number of new beds in purpose-built student accommodation, from an average of 30,000 a year between 2010-20 to just 8,760 in 2023/24, the SMF found.
These concerns are not just limited to the UK. Similar fears have led politicians in Canada to announce a two-year cap on international student numbers and to end post-study work rights for students at some colleges.
Instead of switching between extremes of very permissive or very restrictive visa routes, this is an opportunity to fix universities’ high risk, high reward funding strategy, and ultimately gain greater public acceptance for international student numbers in the UK, the SMF said.
To make universities more selective in the international students they take on without jeopardising their financial stability or the UK’s reputation as a good place to study, the SMF recommends the following actions:
- Cap the growth of international students by requiring UK Visas and Immigration to reject university requests for student visa allocation increases where there are housing shortages in the locality.
- Update the International Education Strategy with targets to diversify international student intakes, reducing the proportion of their international student income that comes from one or two countries.
- Compensate universities for the lost income from international students with an increased teaching grant tied to inflation. The next government should commit to increasing the direct grant funding provided to universities to counteract the effect of the decline in the unit of resource for home students.
- Reform visas to maintain the UK’s attractiveness to international students.
- Allow applicants to spread application fee for a two-year UK Graduate visa across multiple instalments, to reduce the likelihood that the UK misses out on talented international applicants who cannot afford to pay this lump sum on top of often exorbitant course fees.
- Reducing the new entrant salary threshold from £30,960 to £26,000, the estimated median salary for a domestic graduate in work 15 months after graduating, could reduce the likelihood that prospective international students hoping to settle are dissuaded from coming to the UK.
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 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.
Jonathan Thomas, author of the Crazy for you report and Senior Fellow at Social Market Foundation, said:
“This year has seen a shift – not only in the UK but also in the major competitor markets for international students of Canada and Australia – away from the policy presumption that attracting international students without limit is immune from any trade-offs and tensions. This shift is a good thing, as it provides the UK with an opportunity to acknowledge and address them, rebuilding slipping public confidence and maintaining public consent to the UK’s continued openness to international students.”
Notes
- The SMF report, Crazy for you, will be published at https://www.smf.co.uk/publications/international-students-politics-uk/ on 24th June, 2024. This report is a survey of the policy and political developments that have brought the UK to its current approach on international student numbers, and the key takeaways from the Migration Advisory Committee’s recent review of the graduate route which point to the considerations that need to be part of the future of this policy space.
- The complementary SMF report, Too much of a good thing?, will be published at https://www.smf.co.uk/publications/university-funding-graduate-visa/ on 24th June, 2024. It lays out how to manage international student numbers to reduce accommodation pressures without creating a financial stability risk for the higher education sector.
- The recent restrictions on international students in UK universities refers to the following recent rules changes: in May 2023, the government announced that only postgraduate research students would be permitted to bring dependants on student visas and that students would be prevented from switching to a work visa while studying. This was followed in December 2023 by the announcement of a review of the graduate route by the MAC. A related development was the increase in minimum salary threshold for skilled worker visa, which affected foreign graduates in the UK when applying for post-study work.
Contact
- For media enquiries, please contact Impact Officer Richa Kapoor, at richa@smf.co.uk
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