New analysis reveals UK universities reliance on international students
In a recent analysis conducted by international consulting firm PwC, the sustainability of UK universities is brought into sharp focus. The findings reveal a concerning dependency on international student tuition, and a potential financial crisis looms if current trends persist.
PwC's UK Higher Education Financial Sustainability Report, commissioned by Universities UK, suggests that over half of universities in England and Northern Ireland could face deficits in the 2025/26 academic year if international enrolments continue to decline.
This revelation aligns with the recent data from Enroly, indicating a significant drop in student acceptances and deposits.
Up to 80% of UK universities could fall into deficit if international enrolments continue to decline.
The January 2024 intake of international students has seen a staggering 36% reduction in Confirmation of Acceptance for Studies (CAS) issuance compared to the previous year.
Deposits are also down by 37%, with particularly alarming drops in key source markets like Nigeria, where deposits have fallen by 72%, and India, down by 37.5%.
PwC's analysis reveals a worrying trend of institutions assuming increased international fee income in the future, leading to overoptimistic projections. Should foreign student demand decline, even a 5% drop in international enrolments could double the number of universities in deficit.
Universities have become overly dependent on international student fee income.
The report points to a vulnerability in the system, highlighting that universities, especially larger research-intensive and specialist providers in England, have become overly dependent on international student fee income. PwC notes that this reliance has grown due to diminishing revenue from domestic student enrolments.
Participation of domestic students in higher education declined in the 2022/23 academic year, and domestic tuition fees have remained fixed at £9,250 per year since 2017. PwC highlights that teaching domestic undergraduates often incurs a net cost for providers.
With domestic enrolment on the decline and fixed tuition fees, UK universities have turned to international students as a necessary and dependable source of income.
Rising costs and policy changes serve as potential factors of the decline.
However, this reliance on international students is facing challenges this year due to several factors, including a recent immigration policy preventing most foreign students from bringing dependents.
Additionally, the increasing cost of living is making it more challenging for students to consider studying in the UK, particularly those whose currency, like the Nigerian naira, has significantly depreciated.
Long-Term Implications
Despite a strong international brand and academic excellence, the financial challenges faced by institutions threaten the quality of education and student outcomes. The report suggests that without system-level intervention, the sector may require consolidation, with up to 80% of providers potentially falling into deficit.
