Social Market Foundation highlights 'overexpansion and overreliance' following 2019 student visa reforms
An interesting report published last month by the centrist, cross-party Social Market Foundation (SMF) think tank looks at the problems created by the rapid rise in the number of international students coming to the UK since 2019.
Image credit: UK GovernmentYou can download the 24-page report here.
In 2019, the Conservative government announced major changes to student visas and introduced the new Graduate route, allowing international students to stay in the UK for two years after graduation to find a job. The number of international students rose by over a third following the changes, up from 496,110 in 2018/19 to 679,970 in 2021/22.
The SMF asks whether this may have been too much of a good thing, as it lessened the economic benefits of international students and created pressures on student housing. In addition, UK universities have become overreliant on the "fundamentally insecure" income from international student fees.
Measures to reduce student numbers were announced in 2023 by the Conservative government as part of efforts to reduce record levels of net migration. The SMF warns the measures have the potential to damage the UK's economy, international standing and the financial position of its universities.
As the SMF's report highlights, the economic benefit of international students was one of the key reasons for the 2019 visa reforms: "International students contribute to education exports worth £25.6 billion in 2020, on track to meet the target of £35 billion by 2030. Yet this is only one aspect of their economic contribution. In a 2023 report, London Economics estimated that the economic benefit of the 2021/22 cohort of international students would be £41.9 billion, comprised of tuition fees, living cost spending and spending due to family and friends' visits."
Brexit and the 2019 visa changes led to a major change in the countries of origin of international students coming to the UK: The SMF notes: "These post-2019 international student flows have had different characteristics. The number of international students from EU countries has collapsed since the change in fee and visa status following Brexit, and numbers from China have stagnated. The growth in numbers has instead been driven by flows from India, Nigeria and Pakistan, with India overtaking China as the largest source of international postgraduate taught (PGT) students in 2022/23. The growth in numbers has also overwhelmingly been at the PGT level, and whereas students from China and the EU are more likely to study at Russell Group universities, new entrants from India and Nigeria tend to study at post-1992 universities."
The number of dependants brought by students also increased significantly: "Since 2019 the number of student dependants has risen from negligible levels to 148,000 by 2022, accounting for 24% of all student visas. Students from Nigeria and India are the most likely to bring dependants, accounting for 54% and 23% of all student visa holders respectively, compared to less than 1% for Chinese student visa holders."
The SMF report explores the problems created by the overexpansion of international students and the overreliance on their income.
The proportion of UK universities' income that comes from international student fees rose to 23% in 2022/23, leaving the financial stability of universities exposed to factors outside their control.
According to the SMF, the scale of the recent increase in international student numbers watered down their economic benefits, with the per-student economic benefit falling and the overall aggregate fiscal costs of international students rising due to the growth in the number of dependants.
The overexpansion also overwhelmed universities' ability to effectively accommodate their students, damaging the student experience. The SMF adds that there is also some evidence that, in the short-term and on a small scale, it may have resulted in international students displacing home students.
The Conservative government's subsequent response to reduce the number of student visas introduced its own problems.
The report notes: "It is clear that this response has been poorly thought out, narrowly focusing on cutting headline migration figures with little consideration of the other policy areas that international student migration touches on. The government's decision to change the rules around postgraduate taught students bringing dependants does not appear to have been based on a detailed assessment of the likely impact of the changes on international student numbers; in light of the most recent preliminary figures, that impact now looks substantial. Nor has the government put any policies in place to mitigate the fact that it appears to be knocking universities' last financial support out from under them, despite the dramatic impact this could have on the sector's finances."
The SMF makes a number of recommendations in the report and argues that to control international student numbers without creating a financial crisis in higher education, the government needs to accompany visa reform with financial support for universities.
"To achieve a financially healthier higher education sector while retaining the benefits that international students provide the UK, then, the government must take a more intentional and holistic approach to the issue of international students, considering the impacts of its policy on the higher education sector's funding as well as on headline immigration figures, and provide the sector with more strategic direction", the SMF says.