Imminent Collapse: How Falling International Student Numbers Threaten to Close UK Universities

The UK’s higher education sector is facing imminent collapse due to debts accumulated by years of tuition freezes, as well as a decline in international students, who are frightened by hostility towards foreigners, tighter visa procedures, and high tuition fees.

The most striking evidence of a severe crisis affecting the sector is the announcement by a number of universities of a deficit this year, and plans to lay off dozens of staff at a number of universities.

It is worth noting that tuition fees for UK students have remained stable at £9,250 since 2017, and have only increased by £250 in the past 12 years.

Imminent Collapse

No university in Britain has ever gone bankrupt, a record success for a sector with a history of more than 900 years. But that could happen sooner rather than later, given the growing calls for help coming from academic circles.

The head of the largest higher-education union and other experts have warned that some UK universities could be at risk of closure due to a significant drop in international student numbers.

Because they do not receive the generous grants and endowments of universities in the US or other major sources of income, many of these universities are increasingly relying on international students, who pay much higher tuition fees than UK students, to support their finances.

The Higher Education Policy Institute (HEPI) has pointed out that the income of international students is no longer an additional income for UK universities, but rather a capital that some educational institutions depend on.

Josh Freeman, director of policy at HEPI, said that the UK government’s tightening of immigration laws and restrictions on international students wishing to bring their families, which came into effect last January, has had a major impact on universities with medium and low-cost programs.

Universities are increasingly relying on fees paid by international students, which far exceed those paid by UK students.

Annual fees for UK students are capped at £9,250, although recent reports suggest these could also be raised.

For international students, fees range from £11,000 to £60,000 per year, depending on the institution and academic discipline.

In the 2022/2023 academic year, UK universities earned £11.8 billion from international students, representing 23% of total university income.

However, recent changes to visa rules, inflation in home countries, increased international competition, and Brexit have led to a significant decline in international student numbers in the UK, particularly at the postgraduate level, leaving around half of universities operating at a loss.

Study visa applications in July and August were down 16.4% on the previous year, according to Home Office data, and universities see further declines this autumn. 

Russell Group universities have reported a 10% overall fall in master's applications for the September 2024 intake.

Already, 40% of higher education institutions have reported that they expect to make a financial loss this year, according to the Office for Students.

Although undergraduate student numbers have not fallen as dramatically as postgraduates, they are still below expectations.

A recent report from the Universities and Colleges Admissions Service (UCAS) also suggested that the number of international students gaining places on undergraduate programs this year has fallen.

A 61% drop in overseas entrants would reduce the sector’s annual net income by £9.7 billion by 2026-27, the most negative outcome in a series of scenarios modeled by the Office for Students, the higher-education regulator, in a July report. 

Difficult Options

The financial crisis facing UK universities, which has not been resolved under the Conservative government, leaves the Labour Party, which took over the country after the general elections on July 4, facing difficult options, according to media reports.

Some analyses have indicated that increasing tuition fees for UK students may be one of the proposed solutions to support the financial situation of UK universities, but this proposal is politically unpopular.

According to reports, the UK government intends to raise university fees for UK students to £10,500 annually over the next five years.

According to some studies, these fees should be raised to £12,000 annually if the current levels of inflation in the Kingdom are taken into account.

According to government sources, there are ongoing discussions among Labour ministers regarding this decision, but it still requires the approval of Chancellor of the Exchequer Rachel Reeves.

To mitigate the impact of this increase on the poorest students, the government plans to reintroduce scholarships that were canceled in 2016, and these scholarships amounted to £3,500.

Meanwhile, Universities UK (UKK), which represents 141 institutions, has announced a plan for the future of higher education that includes reducing reliance on international students in exchange for allowing tuition fees to rise.

Other options available to Starmer’s government include imposing a cap on the number of students admitted to universities for the next academic year, along with significant cuts to university budgets.

Rescue Plans

In the same context, the Labour government rejected the request for a rescue package for universities submitted by Jo Grady, general secretary of the University and College Union, which represents 120,000 employees in this sector.

Last July, Education Secretary Bridget Phillipson announced that UK universities grappling with financial problems should not bank on being bailed out by the government.

Dozens of universities are planning or are already cutting staff and courses to cut costs – including Lincoln, Huddersfield, and Goldsmiths.

In recent months, at least 15 UK universities have announced job cuts and additional cost-saving measures in an attempt to save their finances over the next academic year.

In March, more than 120 staff at Sheffield Hallam University received at risk of redundancy letters.

In February, the University of Kent proposed cutting 58 jobs and nine courses in response to financial challenges.

With more than 300 universities across the region, UK universities have become a powerful instrument of British soft power and a major source of economic activity.

The sector supported 768,000 full-time jobs and generated economic output of more than £130 billion in the academic year ending in 2022, according to a study by London Economics.