The UK government¡¯s proposed levy on international student fees could cost English universities ?620 million per year,?with some institutions facing bills of more than ?20 million each, analysis shows.

Ministers revealed in the new immigration White Paper?that they are exploring taking a cut?of international education income?to be spent on higher education and skills, with?6 per cent the amount modelled by the 51¹ú²úÊÓƵ Office.

Although little further detail has been released about the levy, it is understood?it would only initially apply to English universities.??for 2023-24 show that if a?6 per cent levy were applied to non-UK tuition fee income, it would cost ?620.5 million in England. If applied to the whole of the UK, the total bill would be??728.3 million.

While it was difficult to predict the precise impact of the levy, Gavan Conlon, co-head of the education and labour market teams at the consultancy firm London Economics, told Times Higher Education?that the highly competitive market meant that some higher education institutions were likely to take a financial hit, rather than pass on the extra cost to students.?

51¹ú²úÊÓƵ

¡°Those institutions facing greater competition may be forced to keep tuition fees at the same level and absorb the levy, or be forced to pass the levy on to students and reduce international recruitment.

¡°Both options pose significant challenges for vice-chancellors in a time where 40 per cent of institutions are in deficit, and the increase in the domestic tuition fee cap for English providers in 2025-26 will be offset by higher employer National Insurance costs.¡±

51¹ú²úÊÓƵ

Times Higher Education¡¯s analysis suggests the levy would cost the average Universities UK member about ?3.4 million. With a large proportion of overseas students attending elite universities, around half (?367.3 million) of the sector¡¯s total levy charges would come from the 24 Russell Group members, if applied to the whole of the UK.?

Conlon said the proposed levy was likely to further decrease the financial sustainability of the sector, with any revenue raised potentially needing to go straight back into the sector in the form of bailouts.

¡°Higher education institutions need certainty in a time of significant financial instability, but the immigration White Paper has only added to the uncertainty experienced by the higher education sector in recent years,¡± he added.

Analysis based on 2023-24 Hesa data suggests that the universities?that?would have to pay the largest levies would be UCL (?41.5 million) and the 51¹ú²úÊÓƵ of Manchester (?27.3 million). Should it be applied in Scotland, the 51¹ú²úÊÓƵ of Edinburgh would face a ?23.3 million bill.

A 6 per cent levy in international fees would cost UCL and Edinburgh about 5 per cent of their total income for higher education course fees ¨C but just 2 per cent at fellow Russell Group member the 51¹ú²úÊÓƵ of York.

Large, research-intensive institutions typically generate the most income from international students, but Conlon said smaller teaching-focused institutions may be most severely hit as they have fewer other income sources.

51¹ú²úÊÓƵ

¡°Many are heavily reliant on international tuition fee income and already have a bleak financial outlook with international students moving to large research-intensive institutions in 2023-24 and 2024-25.¡±

51¹ú²úÊÓƵ

Smaller providers such as Study Group and INTO 51¹ú²úÊÓƵ Partnerships could lose 6 per cent of their total course fees from such a levy.

Costas Milas, professor of finance at the 51¹ú²úÊÓƵ of Liverpool, said the levy would be a ¡°big blow¡± to all universities and that they could deal with it in a number of ways ¨C including paying it directly from their own ¡°shaky finances¡± or pressing the government for a significant increase in domestic fees.

He warned that passing part of the levy on to foreign students risks damaging demand and that widening international intake by lowering admission standards would impact very negatively on the quality of degrees.

Milas said students and universities had been scapegoated by the levy and warned it sent a very negative message that foreign students are not as welcome as they?were in the past.

¡°At the same time, if Labour impose the levy, it is very unlikely that a future Conservative government will get rid of it,¡± he added.

The 51¹ú²úÊÓƵ Office estimates that a 6 per cent levy would reduce international student numbers by about 7,000 per year. However, Conlon said?its findings used outdated London Economics analysis which was based on European Union students?having?home fee status.

¡°This analysis does not reflect the significantly higher fees charged to international students, nor the wider international market that the UK is operating in with non-EU students,¡± he added.

¡°These assumptions need to be tested much more thoroughly ahead of any implementation of a levy, as the impact on student numbers may be significantly higher.¡±

51¹ú²úÊÓƵ

patrick.jack@timeshighereducation.com