Universities scramble to fill places after losing £1.2bn in international fees

Universities “horrifyingly” reliant on international student fees face a desperate scramble to fill places on A-level results day after losing £1.2bn due to a visa clampdown, i can reveal.

Declining applications from UK and international students are fuelling a funding crisis that could force some institutions to close, experts have said.

But school leavers expecting their A-level results next week are more likely to get into their first-choice university in the face of dwindling competition, according to the Higher Education Policy Institute think-tank.

Education experts say even top universities such as Oxford and Cambridge are facing financial challenges, presenting an opportunity for domestic students.

Universities have lost an estimated £1.2bn in tuition fee income over the past year because of falling numbers of international students, according to analysis for i by the Centre for Economics and Business Research.

International students who received visas in the year to March paid an estimated £26.9bn in fees, down from £28.1bn the previous year, the research consultancy found.

The number of sponsored study visas issued to students fell by 31,000 in the year to March, to a total of 447,000, official data shows.

The University and College Union warned of further declines ahead, telling i the university funding system was “broken” and “unstable”.

Earlier this week the Office for Students announced a contract of up to £4m for professional services companies to manage potential university closures and “financial risk” in the sector.

The regulator warned in May that an increasing number of institutions in England could shut down unless they dramatically cut costs or merge over the next few years.

Some 40 per cent of English universities are expected to run budget deficits this year, and some were already working with others on merging or sharing services, the watchdog said.

Education Secretary Bridget Phillipson has previously ruled out any Government bailouts for the sector despite warnings of job losses and even insolvency.

Against a punishing financial backdrop, large universities have been receiving as much as 85 per cent of their tuition fee income from international students, i has found.

Out of all universities with higher education tuition fee income of more than £50m, the Royal College of Art received the biggest proportion of its higher education course fees from international students (85 per cent) in the 2022/23 academic year, analysis of data from the Higher Education Statistics Agency found.

This was followed by the University of London’s institutes, with 81 per cent of its fees coming from international students.

The University of Glasgow was the Russell Group institution with the highest reliance on international student fees, which made up 77 per cent of its higher education tuition fee income.

University College London (77 per cent) and the University of Edinburgh (73 per cent) ranked second and third among the group of prestigious universities.

The University of the Arts London and the London Business School, which is part of the University of London, were among the top 10 English institutions.

International students pay around £11,400 to £38,000 a year for undergraduate degrees, depending on the universities. Their fees are uncapped – unlike domestic fees, which have been frozen at £9,250 a year since 2017.

International students ‘made to feel unwelcome’

Jo Grady, general secretary of the University and College Union, said changes to the immigration system have contributed to falling international student numbers.

The previous government introduced measures to bar most students from bringing their partners and children – known as dependants – with them when they come to study, which took effect in January.

Before the changes, some 152,980 visas had been issued to dependants in the year to September 2023. The number had risen from 14,839 in the year ending September 2019.

Minimum salary requirements for those hoping to get work visas after their studies also increased.

Ms Grady told i the policies have had an impact on the extent to which staff and students were attracted and retained to the UK and called on the new Labour government to reverse the changes.

She said: “The previous Government made international students and staff feel very unwelcome, and many were forced to leave family members behind to even come to study or work here.

“We have a really volatile and unstable funding model for higher education.

“It’s been a product of marketisation, and what it means is that universities have become much more reliant on chasing what has been increasingly ever fewer numbers of international students.

“There’s been obviously clear problems that we’ve seen where the amount of students applying from any one country can be completely dependent on what the currency in their home nation is. We’ve seen this recently with Nigeria.”

Nigeria has been a big driver of a rise in international students in recent years, according to the University of Oxford’s Migration Observatory.

But its currency has plunged in value over the past year, which has led to a significant drop in Nigerian students applying through UCAS (The Universities and Colleges Admissions Service) – from 5,020 last year to 2,570 this year.

Nigerian students have also been more likely to bring partners or children with them, which is no longer allowed.

Some 44,195 students from Nigeria received visas in the year 2021/22, according to the Higher Education Statistics Agency. The country was the third biggest contributor of international students after India and China.

Ms Grady said university vice-chancellors bear some responsibility for lobbying for the current “broken” funding model and called for it to be replaced with a publicly funded system.

Responding to universities getting huge proportions of their tuition fee income from international students, she said: “This is the tactic that many institutions have developed to plug funding gaps, but it’s one that we should all be quite horrified by.”

Asked if universities were at risk of being forced to merge with others to stay afloat, she said there are a “handful of universities that are in quite serious financial trouble”.

“Labour must provide emergency funding in instances where universities are genuinely struggling, but we have to see, first and foremost, jobs protected,” she added.

British students ‘put off university by cost of living’

Rose Stephenson, director of policy and advocacy at the Higher Education Policy Institute, said the frozen cap on tuition fees – combined with pressures posed by inflation – have played a role in universities increasingly relying on international students to plug funding gaps.

She told i a “quite significant” dip in international students is expected, as well as a “slight fall” in the percentage of domestic 18-year-olds applying to university.

She said domestic students were concerned about the rising cost of living and their maintenance loans being swallowed up by high rents.

“In many cases, they look at what they will get in terms of the maintenance loan, and they look at their rent for the year, and the maintenance loan will be at least entirely taken up by that rent in some circumstances, with no money left over,” she said.

Ms Stephenson said universities “across the board” are facing “financial challenges” – including top institutions like Oxford and Cambridge – meaning students who miss their grades are more likely to get in.

Ms Stephenson added that universities with large student vacancies could be pushed to make more staff redundancies and potentially cut courses.

“There is a higher likelihood this year that if you narrowly miss your grade there will be more opportunities for you, which is good news for those students,” she said.

“I suspect that universities will also be working very hard through clearing to pick up students and bring them into their institutions.”

Universities keen to attract international talent

A spokesperson for Universities UK, which represents the sector, said: “UK universities are highly regarded and we continue to attract students from around the world.

“International students are vital to our universities, from the experiences and insights they provide to their fees which cross-subsidise teaching and research.

“Attracting overseas students can be difficult in a volatile global environment. The reputation of our universities, backed by positive messaging from our current Government, will help attract students to study here.”

Josh Fleming, director of strategy and delivery for the Office for Students (OfS), said: “Many universities are continuing to manage their finances well, but we know that a range of factors are making this increasingly challenging for some.

“The OfS’s recent annual financial sustainability report shows that an increasing number of universities will need to make changes to ensure their long-term success.”

A spokesperson for the Russell Group universities said: “The true picture of international student recruitment this year will only be clear once all undergraduate and postgraduate places are confirmed and students arrive in the UK and enrol on their courses.

“We know that across the sector, the international market is increasingly challenging – with the latest Home Office data showing a 15 per cent decline in international student visa applications this July compared to last.” 

A University of the Arts London spokesperson said it was “in a strong position with healthy finances and a strong global reputation”.

They added: “We value the diversity of our student body, and our international students form a key part of that.

“UAL attracts students from around the world because we offer the best creative education in the world – ranked second in QS World Rankings for art and design.”

They said its recruitment strategy aims to future-proof against any sudden loss of applications from a particular country, and has measures in place such as controlled management of applications from countries where they see a high volume and diversifying its international applications.

Following the publication of this article, the University of London said it is the UK’s largest provider of international online and distance education, so the “vast majority” of its 40,000 students are studying “wholly abroad via distance learning education”.

A spokesperson said its international fee income is largely reflective of this group of students, and it has around 200 postgraduate students in the UK on campus at the School of Advanced Study.

The University of Edinburgh and University of Oxford declined to comment.

The Royal College of Art, University of Glasgow, University of London, University College London, University of Edinburgh, London Business School and the University of Cambridge did not respond to requests for comment.