The financial health of UK universities is under strain as declining international student numbers, coupled with visa restrictions, create a funding shortfall. Renowned globally for their academic excellence, British higher education institutions are grappling with the financial impact of a drop in foreign student enrolments, who traditionally pay far higher fees than domestic students.
Decline in international student numbers
In 2022, Britain hosted nearly 760,000 foreign students, making it the second most popular study destination globally, following the United States. However, recent data reveals a troubling trend: student visa applications fell by 5% last year, with a sharp 16% decline recorded between July and September compared to the same period the previous year.
India, China, and Nigeria have been the primary sources of international students. For many, studying in the UK represents an investment in their future careers. Leo Xui, a 20-year-old Chinese student at University College London, is paying £31,000 in annual tuition fees, a stark contrast to the £9,250 cap for British students, which has remained unchanged since 2017.
The Labour government, elected in the summer, recently announced a modest increase in the tuition fee cap to £9,535 from next year. While welcomed by universities, this adjustment fails to address the broader funding challenges exacerbated by inflation.
Financial struggles in higher education
According to Universities UK (UUK), the umbrella body representing 141 higher education institutions, funding per student has hit its lowest level since 2004. The real value of the £9,250 fee has been eroded by inflation, equating to less than £6,000 in current terms.
“We are all feeling the crunch,” said Sally Mapstone, president of UUK, at a recent conference. Many universities have turned to international students to fill budget gaps, with some institutions now heavily reliant on their higher tuition fees.
For example, international students account for over half the student body at London’s University of the Arts and Cranfield University. However, the Financial Times reported earlier this year that some universities, including York, have resorted to lowering admission criteria to attract more foreign applicants.
Visa restrictions and Brexit impact
The previous Conservative government, ousted in July, imposed restrictive visa policies to curb record migration levels, making it harder for universities to recruit foreign students. Measures included bans on family members accompanying students and restrictions on switching to work visas while studying.
These policies have made the UK less attractive compared to competitors like Canada, Australia, and the Netherlands, where courses are also taught in English and visa policies are perceived as more student-friendly.
The Brexit fallout has further compounded the problem, particularly for EU students. Coventry University Provost Ian Dunn highlighted the impact: “We had 4,400 students from the European Union. Now we’re probably at 10% of that.”
The financial fallout
The decline in international student numbers has forced some universities to cut courses and teaching positions. A lecturer, speaking anonymously, described the situation as dire: “The drop in international students has dramatically worsened the crisis for us.”
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In the first four months of 2024 alone, there were 30,000 fewer overseas applications compared to the same period in 2023. Nick Hillman, director of the Higher Education Policy Institute, noted that these figures confirmed fears about the UK’s diminishing appeal as a study destination due to government policies.
Exploring new models
Some institutions, like Coventry University, are exploring innovative solutions to counteract the financial strain. The university has partnered with overseas institutions to establish campuses in countries such as Egypt, Morocco, India, and China. These campuses allow students to earn Coventry degrees without ever setting foot in the UK.
A competitive global market
As universities in Canada, Australia, and the Netherlands continue to attract students with favourable policies and comparable academic standards, UK universities face the challenge of redefining their strategies to remain competitive.
The UK’s reputation for academic excellence remains strong, but the sector must navigate a complex landscape of visa restrictions, post-Brexit challenges, and global competition to maintain its position as a leading destination for higher education. Without significant reforms, the current funding “crunch” risks undermining the sector’s long-term viability.
