International student hit ‘core financial problem’ for UK sector

A large drop in international student numbers is still likely to be the biggest single issue for UK universities irrespective of any disruption in domestic admissions caused by the coronavirus pandemic, it has been suggested.

University finance data from the Higher Education Statistics Agency show that about a quarter of institutions in the UK rely on domestic students for at least two-thirds of all their income. At the same time, only about a dozen universities receive a third or more of all their income from non-UK students.

However, several studies have shown that tuition fee income from non-EU students can carry a huge surplus for universities, which then can be invested in areas such as research.

For instance, 2017-18 figures from the Office for Students estimated that the teaching of overseas students produced a surplus for universities in England and Northern Ireland of about £1.4 billion.

Nick Hillman, director of the Higher Education Policy Institute, said the “biggest problem from fewer international students is the shortage of cross-subsidies for other activities (as well as less diversity on campus).

“If international students drop a lot in number, then it’s not just courses becoming unviable that matters but also lots of research projects.”

Martine Garland, a lecturer in marketing at Aberystwyth University who has studied financial diversification in UK universities, said there were also wider risks for the sector from a drop in international students.

“The challenge will come when those institutions [that recruit a lot of overseas students] then try to plug their international student gap with domestic students, which will cause an even greater ‘scramble’ for [UK] students than usual,” she said.

This is where a return to a cap on domestic undergraduate numbers at individual institutions “could be a good thing” for some post-92 universities that might be “least well placed to compete” for UK applicants, she added.

However, Mark Corver, former director of analysis and research at admissions body Ucas and co-founder of consultancy dataHE, said a better way to protect such universities might be direct financial assistance while allowing continued flexibility in admissions choices.

“Of course, increasing flexibility may put some universities under extreme temporary financial pressure. Here, as elsewhere in the economy, the challenge is to preserve valuable strategic capacity through financial assistance until the temporary effects subside.

“This, we believe, is a very different objective to adapting admission patterns to address the emergency constraints of the situation. Our concern is that trying to pursue both objectives with one blunt tool – number controls – may not give the best outcomes,” Dr Corver said.

Dr Garland added that universities that were reliant on one fee income stream – such as domestic students – could be taking various steps now to ensure that they recruited enough new applicants, including stepping up online engagement efforts such as virtual open days and social media campaigns.

They could also look at other ways to grow teaching income opportunities for the future, she said, like reaching out to local businesses to see “what learning…they need to try to sustain their income in this new world”.

Meanwhile, Mr Hillman suggested that a large drop in overseas student demand might be best mitigated through the Home Office easing visa and other restrictions rather than via other measures such as universities lowering tuition fees.

“I know it would be out of character for [the Home Office], but crises can do funny things…and the current situation is an opportunity to recalibrate our policies,” he said.

simon.baker@timeshighereducation.com