Vivienne Stern, the chief executive of Universities UK, representing over 140 universities, has expressed concern about a potential “serious overcorrection” in the sector attributed to immigration policies that are perceived to discourage international students from choosing Britain for their studies.
Many UK universities are at risk of financial deficits due to a sharp decline in international students, partly attributed to what is perceived as hostile rhetoric from Rishi Sunak’s government, warns the head of the sector’s main lobby group.
Vivienne Stern, the chief executive of Universities UK, representing over 140 universities, has expressed concern about a potential “serious overcorrection” in the sector attributed to immigration policies that are perceived to discourage international students from choosing Britain for their studies.
Stern remarked, “If they want to cool things down, that’s one thing, but it seems to me that through a combination of rhetoric, which is off-putting, and policy changes …[they have] really turned a whole bunch of people off that would otherwise have come to the UK.”
The UUK CEO’s appeal coincided with revelations that certain prestigious universities, such as York, a member of the Russell Group, were compelled to lower entry requirements to sustain the enrollment of international students.
Increased dependence on international students
Over the past decade, as the £9,250 (about $12,000) domestic tuition fee remained essentially frozen, UK universities have become more dependent on non-EU students to sustain their financial health with fees from non-EU students currently contributing to nearly 20 percent of the sector’s income.
Universities caution that enrollment numbers have significantly decreased this year due to a series of government policy moves. There are indications that enrollments may have declined by over a third from crucial countries, including Nigeria and India.
Policy changes
In January, Sunak emphasized government policy changes aimed at preventing international graduate students from bringing their family members to the UK. He asserted that the policy was “delivering for the British people.”
The government declared a review of the “graduate route,” allowing international students to work in the UK for two years after graduation in Dec. 2023.
Additionally, a crackdown on “low-value courses” was announced, despite only 3 percent failing to meet the criteria set by the regulator.
Enroly, a web platform utilized by one in three international students for university enrollment management, reported a 37 percent decrease in deposit payments compared to the previous year.
Analysis from PwC consultants
New analysis conducted by consultants PwC for Universities UUK revealed that the confluence of declining international student numbers, frozen tuition fees, increasing staff wage costs, and a decrease in UK student numbers was creating a challenging scenario for the sector, akin to a perfect storm.
The PwC analysis, derived from the financial returns of 70 UUK members in England and Northern Ireland for the 2021-2022 period, indicated that approximately 40 percent of these institutions are anticipated to be in deficit in the fiscal year 2023-2024 and is expected to decrease to 19 percent by the fiscal year 2025-2026.
As per the PwC analysis, in the scenario where the growth in international students halts during the 2024-2025 academic year, the percentage of universities facing financial deficits would escalate from 19 percent to 27 percent.
However, if international student numbers experience a decline ranging between 13 and 18 percent, four-fifths of the universities would find themselves in deficit.
Conversely, the PwC analysis indicated that implementing a 10 percent increase in fees for UK undergraduates in the 2024-2025 academic year would reduce the percentage of universities in deficit from 19 percent to 7 percent.
The report cautioned that the impact of diminishing international enrollments could be exacerbated by additional adverse shocks, such as an increase in spending growth or a decline in domestic student numbers.
It emphasized that the escalating financial pressure might compel universities to reduce offerings and postpone investments, potentially compromising the quality of education for students.
Finding appropriate balance
Stern advocated three interventions to establish a stable foundation for the sector: adjusting tuition fees in accordance with inflation, augmenting government teaching grants, and stabilizing the international market by moderating negative rhetoric and addressing uncertainties regarding the graduate route.
Higher education minister Robert Halfon noted the government’s commitment to finding the appropriate balance between decisively addressing net migration, which is deemed excessively high, and attracting the most talented students to enroll in UK universities.
