UK universities expected to face financial pressures following drop in international students

Many UK universities are expected to fall into financial deficit because of a huge decrease in international students, following government reforms to immigration policies. 

 Vivienne Stern, the Chief Executive of Universities UK, said the sector faced a “serious overcorrection” as the new measures are likely to discourage international students from studying in Britain.  

The rector really turned a whole bunch of people off that would otherwise have come to the UK.

Vivienne Stern, Chief Executive of Universities UK

 She told the Financial Times: “[They have] really turned a whole bunch of people off that would otherwise have come to the UK.” 

Stern urged the government to be “very careful” with their rhetoric and policy changes to ease the financial difficulty faced by the higher education sector, which contributes £71bn annually to the UK economy.

UK universities have become more financially dependent on non-EU students, who account for nearly 20% of the sector’s income, due to the £9,250 cap on domestic tuition fees.

In the 2022-23 academic year, those from abroad made up 37% of the University of Warwick’s student body.

However, the number of international students is expected to drop following the government’s new immigration policies. 

The policies include a ban on international graduate students bringing family members to the UK and an increase in the minimum earnings threshold for Skilled Worker visas to £38,700. The government also announced that it was reviewing the “graduate route”, which enables international students to work in the UK for two years after they graduate.

40% of universities in England and Northern Ireland are expected to be in deficit in 2023-24

One senior university insider told the FT the number of international students in January 2024 was “way below the bottom end of projections for everyone”.

An analysis by PwC found that 40% of universities in England and Northern Ireland are expected to be in deficit in 2023-24 thanks to the reduction of international students, frozen tuition fees, rising labour costs, and a softening in UK student numbers. 

The analysis also warned that universities’ financial precarity may force them to compromise student quality, cut provisions, and delay investment. 

The University of York said it may accept overseas students with lower grades because of the financial pressure, while Coventry University will make a £100m cut in the next two years due to a decrease in income. 

We are fully focused on striking the right balance between acting decisively to tackle net migration, which we are clear is far too high, and attracting the brightest students to study at our universities.

Robert Halfon, Higher Education Minister

Higher Education Minister, Robert Halfon, said: “We are fully focused on striking the right balance between acting decisively to tackle net migration, which we are clear is far too high, and attracting the brightest students to study at our universities.”