Financial Instability in UK Universities: The Impact of Dropping International Student Numbers

University of York's Financial Report Highlights Challenges in International Student Market

The escalating tuition fees for international students at UK universities have sparked a wave of concern among experts, as institutions grapple with financial instability amidst declining overseas student demand. Reports for the 2023-24 academic year show many institutions operating at a loss, with staff threatening industrial action over job cuts and program reductions. In response, some universities have raised international tuition fees above inflation to counteract the impact of lower student numbers.

The University of York raised its international undergraduate and postgraduate tuition fees by 12% for the 2023-24 academic year. Despite enrolling 505 fewer international students, the university's 2024 financial report showed a boost in income from international student fees. York's overseas student numbers peaked at 6,320 in 2021-2022, then dropped to 5,345 in 2022-2023, and further declined to 4,840 in 2023-2024. The university reduced its deficit to £6 million in 2024, down from £24 million in 2023, with tuition fee income increasing by £4 million to £260 million. Home student income grew by £2 million, reflecting a 2% rise in home student numbers.

The university acknowledged ongoing uncertainty in international student markets, citing domestic visa policies, geopolitical issues, and rising competition from other countries. Despite a decline in international student numbers, income from international fees increased by £2 million. This reflects a broader trend across UK universities, which, after a surge in international students during and after the COVID-19 pandemic, have seen demand drop as other study destinations reopened. In response, many UK universities are cutting unpopular programs and making staff redundant.

The University of York attracted attention in early 2024 when an internal memo revealed it was lowering entry requirements for some international students due to "financial challenges," as reported by University World News. Similarly, the University of Manchester raised its international undergraduate and postgraduate fees, leading to a £54.4 million increase in tuition fee income, with £53.9 million of that from international students. Despite a surplus of £41.6 million in 2023-2024, down from £65.2 million the previous year, the university's financial report highlighted the growing reliance on international student fees.

The report noted that EU students are now classified as international. In 2024, the University of Manchester had 19,015 international students, slightly down from 19,065 in 2023, and 26,980 UK students, down from 27,395 the previous year. The decline was mainly due to a drop in postgraduate teaching enrolment, which fell from 12,095 in 2023 to 11,265 in 2024. The university acknowledged that its success in international markets, while a strength, also poses risks due to immigration and national security issues, leading to lower-than-expected international applications. It highlighted its reliance on students from a few countries, especially China, and emphasized the need to diversify its student body to mitigate the risk of geopolitical disruptions.

Furthermore, the report stated that international fee pricing has been adjusted to align with the market and the university's global reputation. While this limits further increases in international student numbers, it also requires careful balancing to avoid over-reliance on key countries. David Pilsbury, chief development officer at Oxford International Education Group, warned that universities risk "killing the golden goose" by raising prices when demand declines. He emphasized the need for universities to rethink and re-engineer their operations to improve efficiency and competitiveness, as stated in an interview with University World News. Pillsbury noted that studying in the UK is already expensive, similar to the US, Canada, and Australia, and highlighted that changing student behaviours and shifting markets are becoming major challenges. He cautioned that raising prices while other destinations, especially in Asia, are gaining recognition could be a risky strategy.

Dr Janet Ilieva, director of the Education Insight global higher education consultancy, highlighted that the Office for Students (OfS) projected a 27.6% increase in international student numbers and a 49.8% rise in tuition fee income from 2022 to 2026. The report also forecasted a 17.4% increase in non-EU student fees, adding £3,400 per student between 2022-23 and 2026-27. The OFS cautioned that forecasts for international student recruitment may be overly optimistic, as demand from key countries is highly sensitive to economic factors, making fee increases potentially unattainable.

In an interview with University World News, Ilieva argued that continuously raising international student fees is unsustainable and could make universities appear "greedy." However, she acknowledged that international fees are the only income source with growth potential, unlike regulated domestic fees. Dave Amor warned that rising tuition fees, combined with declining international student numbers, could shift demographics, attracting more Chinese and fewer Indian students to the UK.UK universities risk pricing themselves out of reach for many international students, who may be drawn to study destinations outside the "Big 4" (UK, USA, Canada, and Australia).

He also highlighted the weakening position of UK universities in global rankings, the success of Australian universities in improving their rankings, and rising study visa costs, including a 66% increase in the NHS immigration health surcharge, which may discourage international students from choosing the UK. Dr. Cheryl Yu advised that Russell Group universities must adopt new strategies, particularly in China, to maintain market share. She highlighted that some universities are focusing on institutional collaborations, offering foundation years or the first few years of a degree in China, followed by studying abroad for the remainder.

Yu noted that rising tuition fees and living costs have made studying in the UK prohibitively expensive for many Chinese students, who are increasingly focused on return on investment (RoI). She also highlighted the impact of employment pressures in China, where employers value QS rankings, and pointed out that fewer UK universities are in the top 100, citing the University of York’s drop from 167th to 184th. She cautioned that increasing international tuition fees could push more Chinese students toward regional study abroad options closer to home in Asia, boosting the appeal of local international education, including branch campuses and other forms of transnational education.

In conclusion, the ongoing increase in international tuition fees by UK universities, amidst declining student numbers and financial challenges, poses significant risks. As experts warn, these strategies could ultimately undermine the competitiveness and attractiveness of UK higher education, potentially driving students to seek alternatives in other regions.

Editor's Note:

UK universities are grappling with financial difficulties due to a drop in international student numbers, worsened by the post-pandemic reopening of other global study destinations. To recover lost revenue, many have raised international tuition fees. However, experts warn that this strategy may not be sustainable. Rising fees could make UK institutions less competitive, especially for students from key markets like India and China, who are increasingly focused on return on investment. While higher fees may provide short-term financial relief, this approach risks pricing out many potential students. The sector must reassess recruitment, pricing, and international partnerships to remain competitive globally. 

Skoobuzz believes that the future of UK higher education depends on adapting to these challenges while preserving its appeal as a top study destination.