A proposed government levy on international student tuition fees could place additional financial pressure on UK universities, according to new analysis from the Higher Education Policy Institute (HEPI).

The proposal would introduce a 6 per cent levy on fees paid by international students. It was outlined in the government’s immigration white paper published in May, with further details expected in the Chancellor’s autumn budget and a forthcoming Department for Education white paper.

Financial Impact on the Sector

HEPI estimates that the levy could cost English universities £621 million per year. Concerns have been raised about the scale of the impact and the lack of clarity around how the funds would be allocated.

Universities are already managing significant financial challenges. The proposed levy adds further uncertainty as institutions plan for upcoming academic years and long-term investment.

The Role of International Students

International students are central to the UK higher education funding model. They contribute over £10 billion annually in tuition fees, representing around 45 per cent of total fee income across English universities.

At leading institutions such as University College London, Imperial College London, and the London School of Economics, international students account for more than 70 per cent of fee income.

Under the proposed levy, several universities could face substantial additional costs, including:

  • University College London: £42 million

  • University of Manchester: £27 million

  • King’s College London: £22 million

Implications for Teaching and Research

Income from international students also supports research activity. Universities currently face a £6.2 billion shortfall in research funding from grants and contracts.

To offset the cost of the levy, institutions may need to reduce spending on teaching and research or increase fees. Both options carry risks for quality, competitiveness, and student experience.

A Competitive Global Market

The global market for international students is highly competitive. Analysts have warned that additional costs could weaken the UK’s ability to compete with other major education destinations. A similar levy proposed in Australia was withdrawn in 2023 due to concerns about its impact on universities.

The government has indicated that funds raised by the levy would support broader educational priorities. However, questions remain about whether the revenue would be fully reinvested in higher education and how spending decisions would be made.

As universities and business schools navigate an increasingly challenging financial environment, policy clarity and long-term funding stability will be critical to maintaining the UK’s global standing in higher education.

Source:The National