UK universities face ‘financial crisis’ as international student numbers fall

Following a decline in the numbers of international students, the future of the higher-education sector appears increasingly unstable.

Figures published by the Home Office in July 2026 show that student visa applications dropped by 11% compared to 2025.

The falling numbers present a further challenge to universities, which depend on the higher fees international students pay to offset the subsidised cost of domestic students.

The decline in international applicants is a result of national pressure to reduce immigration in recent years, with governments passing policies aimed at tightening visa restrictions.

In January 2024, the Conservatives introduced regulations preventing large numbers of postgraduate students from bringing dependants to the UK.

A new £925 annual levy on international students may also have influenced the falling numbers. The flat charge is levied directly on universities for each student enrolled, rather than on students themselves, adding to pre-existing economic pressures.

The new measure, which will take full effect from 2028, has proven unpopular with university staff.

The Home Office… can do one thing tomorrow that will help universities, and that is to quietly drop the idea of taxing international student fees

Vivienne Stern, Chief Executive of Universities UK

Vivienne Stern, Chief Executive of Universities UK , has encouraged the government to “do one thing tomorrow that will help universities, and that is to quietly drop the idea of taxing international student fees”, labelling the figures as a “wake-up call”.

The freeze on domestic undergraduate fees at £9,250 between 2017 and 2025 meant inflation eroded their value by a third.

This economic pressure has pushed universities to become dependent on international students, and the higher fees they pay, to maintain their daily functions.

Many institutions have had to cut staff numbers and remove courses to cope with the current climate.

Most recently, the University of Exeter announced it was scrapping its geography course at its Penryn campus, a decision that has disadvantaged current applicants and given little notice to affected staff.

Vice-chancellor Professor Shitij Kapur of King’s College London has said that every five international students impact one university job, demonstrating their importance to the sector’s stability.

Whether international students are less inclined to come to the UK due to growing visa restrictions and fees, or institutions are less willing to accept them under the new policies, the impact on the sector is significant.

Under financial pressure, institutions are scaling down courses and staffing, making higher education less accessible for prospective students and reducing job opportunities for others.

Though tuition fees for domestic students are rising annually, it remains unclear as to whether this will resolve the sector’s financial pressures.