Scottish universities face financial crisis as international student numbers plummet

Scottish universities have had their budgets reduced by £100 million due to plummeting international student applications putting into question what the wider impact will be on the student accommodation sector.

First reported on by Calum Ross in The Scotsman, the news comes after Universities Scotland – the representative body of Scotland’s 19 higher education institutions – revealed that the number of international students enrolling in taught postgraduate courses is down by more than 20 per cent in the 2023/24 academic year.

Next academic year could see 92,000 fewer international student applications.

The situation is expected to intensify next year with applications from overseas projected to nosedive by 27 per cent.

Universities Scotland said “the impact is widespread” this year, with 12 institutions reporting lower intakes than forecast. Next year, 14 of 15 responding institutions were seeing a fall.

The biggest decline of all Scotland’s universities was of 79 per cent.

The crisis brings attention to the financial models that UK universities have become dangerously reliant upon – using fees from international students to subsidise the tuition cap for domestic students.

"Whilst pressures are manifesting now, the real challenge for universities is not financial year 2025/26, but the three-to-five-year period after that, if we continue on this path," Universities Scotland warned in their evidence.

The submission makes clear that “very difficult choices” will need to be made by institutions if this trajectory continues unchecked – setting the stage for a potential new wave of course closures, job cuts and restructuring across the sector.

We have already seen the beginning of this fight for survival.

Aberdeen University, which faced questions over its very future earlier this year, has moved to cut its modern languages degrees despite a furious backlash.

The institution has since announced it closed a £20m deficit through a program of voluntary severance, early retirements and new revenue streams.

But it remains in an extremely “precarious” position according to university leaders.

Across the city, Robert Gordon University has launched a similar voluntary severance scheme that could see up to 220 staff made redundant as it battles an £18m budget blackhole.

Meanwhile, the University of the Highlands and Islands is drawing up restructuring plans. Most others have remained silent on specific measures.

Yet universities simply cannot ignore the new fiscal reality.

Universities are particularly exposed due to their reliance on dwindling international student tuition fees.

One way or another, the report claims that universities will have to take difficult decisions to rebalance their budgets as the cross-subsidy from overseas students withers.

That could have major knock-on impacts on student housing provision and the private rental market.

Rising voices across the sector, including from recently-departed Universities Scotland chief Alastair Sim, argue that piecemeal cuts are just kicking the can down the road.

According to Sim, what is really needed is a fundamental rethink of how tertiary education is funded in Scotland - including a long-overdue public debate over the future of “free tuition”.

The higher education sector considers the downward trend to be a result of the tightened UK immigration rules and rhetoric around further visa clampdowns.

Universities Scotland said in a statement: “There are multiple factors behind the decline in international demand, but the commonality is that they are all beyond universities’ control. 

“Very significantly, there has been major change to immigration policy led by the UK government, and prolonged speculation of further change to the graduate route visa over 2023/24, which has impacted massively on the UK’s attractiveness as a study destination.

“The removal of the dependents visa for postgraduate taught students from January 1 started to have an impact on student behaviour months ahead of its implementation. In the six months between November 2023 and April 2024, applicants for study visas fell by 26 per cent.”

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