UK universities face ‘financial crisis’ amid collapse in international students

Higher education figures call on Labour to reverse tax on fees and warn institutions at risk of ‘going under’

University leaders are warning of financial turmoil in British higher education after new figures suggested a collapse in international student numbers would deprive the sector of vital income and undermine its future.

The sector’s leaders called on the government to rethink the levy on international student fees imposed under Keir Starmer, as a former universities minister warned there was a risk of a university “going under” because of the financial crisis.

While UK sixth-formers enjoyed improved A-level results , and a record 194,800 English 18-year-olds were accepted by their first choice of university, vice-chancellors who spoke to the Guardian said it would not be enough to stave off further erosion in staff numbers and courses.

Figures published by the Home Office show student visa applications to the end of July fell 11% compared with the previous year. With summer visa applications coming before the start of the academic year in autumn, the gloomy figures mean many UK universities will experience significant losses if the trend continues, with some fearing international enrolments dropping by 30%.

Prof Shitij Kapur, the vice-chancellor of King’s College London, said the fall in international student numbers was “in line with the pessimistic expectations” and may also reflect a drop in postgraduate applications earlier this year.

Kapur said: “The critical thing is what this cycle will entail, which does not become clear till about October. The simple rubric is that every five international students impact one university job. And these falling numbers will invariably impact the financial health and staff complement of universities.

“The silver lining in this gloomy picture is that the strength and desire to go to universities amongst our school leavers remains as strong as ever despite concerns about the loan schemes and graduate jobs, as you can see today.”

Successive governments froze domestic undergraduate fees at £9,250 between 2017 and 2025, allowing inflation to erode their value by a third. Subsequent increases will be largely wiped out by universities paying a £925 levy on each international student.

David Willetts, the Conservative former universities minister and an architect of higher tuition fees, said universities were undoubtedly “under increasing financial pressure and that’s mainly because of the freeze in fees for eight years”.

Willetts added: “There is indeed a risk of a university going under [through] financial crisis, but what worries me more is just all the cutting back on the quality of the education experience of the students and I think we have an obligation to students to ensure their courses are properly funded, including by putting up fees so that the resource goes in.”

Members of the Russell Group of research-intensive universities are being affected by increased financial stress , with the University of Exeter announcing on Thursday that it was immediately scrapping geography courses at its Penryn campus in Cornwall, including for school leavers who had applied this year.

A spokesperson for Exeter said: “We recognise that this is disappointing for affected applicants and difficult for colleagues associated with these programmes.”

Libby Hackett, the chief executive of the Russell Group, said the group’s universities still attracted talented international students in an increasingly competitive global market, bringing cultural and economic benefits to their universities and to the UK more widely.

But Hackett warned: “A series of policy decisions by successive governments, including the unpopular international student levy, risks undermining this success story. This isn’t just worrying for universities – it’s not good news for the UK as a whole. Recent analysis shows that the decline in international students means the UK has lost out on a net economic benefit of nearly £3bn.

“The Burnham government recognises the critical role universities play in our national and local economies and our position on the world stage. We look forward to more consistent decision-making across government in support of economic growth, including measures that enable us to continue welcoming global talent.”

Vivienne Stern, the chief executive of the Universities UK group of vice-chancellors, said the student visa figures “should be a wake-up call” for policymakers.

“There are plenty of people in government who understand the pressure on the sector, they understand how important universities are for local economies and for domestic students, and they are watching this with concern,” Stern said. “I hope those people are knocking on the door of the [Department for Education] and the Home Office, and saying that they can do one thing tomorrow that will help universities, and that is to quietly drop the idea of taxing international student fees.

“I understand the political pressure around immigration, and the UK university sector has to be a good, responsive partner with government in making sure the system works the way it should. But if the government was seeking to reduce overseas student numbers, I think they have overcorrected. What we need is stability and a bit of help to recover our competitive position internationally.”

Jacqui Smith, the skills minister whose portfolio includes higher education, told the BBC on Thursday that the government was concerned that university courses should be good value for money, and suggested future increases in tuition fees would be linked to teaching quality.

“For most people, going to university is a very good and important investment in their future earning potential and in their life,” Smith said.