Article
UK Government potential restriction on international students – what this means for Higher Education
December 5, 2022 4 Minute Read
The UK government is reportedly mooting the idea of restricting the flow of international students as a short-sighted mechanism to control migration*.
This policy could damage one of the UK’s most significant global exports – Higher Education. International students contribute a net minimum of £25.9 billion to the UK economy every year. For context, this the same as crude oil exports, and more than cars and refined oil exports (£22.9 and £18.2 billion respectively). UK Higher Education is world leading. 89 universities feature in the 2023 QS World Rankings, second only to the USA.
Funding from government and tuition fees has fallen in real terms by 19% since 2017/18. It currently costs universities £1,750 to provide each undergraduate degree, a cost which is set to grow to £4,000 by 2024/25 as fees will remain frozen until at least then - a cost growth equivalent to 43% of England tuition fees. If international student fees were to cease, central government funding, tuition fees, or both, would have to increase to cover the funding gap.
This new rhetoric is a sea change to the UK’s International Education Strategy. This strategy actively targets international students, partly to plug the funding gap, but critically to fund the well-known skills gaps in the UK economy. The strategy targeted recruitment of 600,000 international students every year by 2030, which has already been so successful it reached this target 10-years early.
Students from targeted nations have increased the number of dependant visas. However, strict financial checks are carried out before visa applications can be made and there is no guarantee that visas will be extended after the 2–3-year graduate route post-qualification, though increasing the skilled workforce is the ultimate target.
While the UK is a major draw to international students the vast majority, 97.5% leave after their visas expire and they have completed their higher education. This highlights the minimal risk international students present and how the rhetoric does not match up to the reality. Despite rhetoric, reducing international student numbers will not address the fundamental shortage in PBSA. With forecasts suggesting by 2035 an additional 358,000 places in higher education could be needed due to demographic and participation rate trends in domestic students alone, and the current annual delivery of beds is significantly under the number required to deal with this demand and is falling.
Limiting international students’ opportunity to study at UK universities will damage the UK’s higher education sector. It will reduce the economic contribution this cohort bring to the economy, impact university funding and have a significant effect on the global brand of the country.
*https://www.theguardian.com/education/2022/nov/25/cap-on-foreign-student-numbers-could-send-uk-universities-over-the-edge |
Sources: ONS, ONS UK trade September 2022, Higher Education Policy Institute Demand for Higher Education to 2035, Russell Group - A new funding package for high-quality education May 2022, QS |
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Kirsten Dyer
Director, Valuation & Advisory Living Analytics
James Lawson
Director, Student Accommodation Capital Markets
