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Universities rescued by foreign students
In 2021 the UK economy was recovering from the pandemic and facing the highest inflation since the 1970s. Universities faced cost inflation they could not pass on to domestic students, because tuition is capped at £9,250 a year. The cap does not apply to international students. With strong global demand for British degrees, they are charged far more, which makes them a lucrative revenue source and makes higher education one of the UK's largest exports.
Universities dramatically expanded their sponsorship of student visas. The post-Brexit study visa allowed two years of work in the UK after graduation, which made the offer even more attractive to families around the world who could afford the high fees. In 2022, 484,000 international students migrated to the UK, an 80% increase on 2019. Many students also brought dependents, which added to the immigration total.
Why were English tuition fees capped in the first place?
Variable tuition fees began in England in 2006 with a cap of £3,000 a year, set so that universities could charge more while the government limited what students borrowed. The cap tripled to £9,000 in 2012 when public funding for teaching was cut sharply. It rose to £9,250 in 2017 and was held there for years, so inflation steadily reduced its real value. Because students repay their loans only above an income threshold, the cap also limits the debt the government expects never to recover.
Why do international student fees count as exports?
National accounts treat spending by foreign residents inside a country as an export, whether it is a holiday, a medical treatment, or a degree. A student who flies in and pays tuition and rent brings in money from abroad, much as a tourist does. For that reason governments list education alongside services such as finance and consulting when they report export figures. Countries such as Australia, Canada, and the United Kingdom all present international education as a major service export.
How did the post-study work visa attract students?
The Graduate route opened in July 2021 and lets international graduates stay in the UK to work or look for work after finishing a degree. When it opened, it gave two years for most graduates and three for those with a doctorate, and it did not require a job offer. Many countries compete for students with similar offers, because a chance to work afterward raises the value of a foreign degree. Studies of student choice, including surveys by the OECD, have found post-study work rights among the factors students weigh when choosing a country.
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