The United Kingdom’s international higher education sector is at an important crossroads. Successes to date do not guarantee that export growth targets will be achieved. The UK Government should view the value of international students not just as an income stream but also as a core foundation for future economic success.
As set out in its International Education Strategy (IES): global potential, global growth plan in March 2019, The UK Government has significant ambitions for education exports and inbound student numbers. Whilst its 2030 targets of £35bn in education exports and 600,000 overseas students hosted in the UK also include the full range of services – early years, schools, edtech, vocational, english language training etc – higher education makes up the most significant proportion of these headline value and volume metrics.
A great deal of success is already claimed for the IES: close to 680,000 overseas students in 2021-22 and an estimated £25.6bn in education exports and transnational education activity in 2020, despite the pandemic disruption. Higher education represents over 75% of this revenue base and remains the main growth engine. The UK Government and its international education champion, Professor Sir Steve Smith, continues to actively promote the UK through its ‘key growth markets’ of India, Nigeria, Vietnam, Indonesia, and Saudi Arabia. So far so good?
In assessing the competitive outlook for UK higher education on the international stage, consider the macro factors that influence inbound international student demand, the core revenue driver, relative to the UK’s major English-speaking competitor destinations of the USA, Canada, and Australia. Put aside the important factors of academic and institutional reputation, cultural ties, and geographical proximity, which are either very difficult or impossible to influence before 2030.
We are left with:
1) visa and immigration policy
2) economic and affordability factors – including the cost of education, perceived value for money and return on investment
3) student outcomes, especially employability
(Yes, there are other influences in play, such as the perception of the current safety, security and living standards of the destination country, but these are less straightforward to make policy decisions on in a way that has a direct near-term impact on the UK’s attractiveness to international students).
So how well is the UK positioned in these three areas?
1. Visa and immigration policy
One of the 5 main actions committed to in the IES is to:
‘Continue to provide a welcoming environment for international students and develop an increasingly competitive offer. This includes extending the post-study leave period, considering where the visa process could be improved; supporting employment; and ensuring existing and prospective students continue to feel welcome.’
The re-introduction of the 2-year postgraduation work visa in 2021 is credited, along the post-pandemic recovery, with creating rising demand from international students. Yet in order to reduce the level of its politically divisive net migration statistics, the government announced in May 2023 that from January 2024, dependants of overseas students will be prohibited from joining family members during their period of study unless the student visa is issued for a postgraduate research programme. 136,000 visas were issued to dependants of international students in 2022, and the changes are forecast to heavily impact demand and student inflows for taught master’s programs, from India and Nigeria in particular.
Increased fees for visa processing, the immigration health surcharge (IHS), and dependant visas (where still available) will be further hurdles once introduced for applicants for 2024 onwards. As the incumbent Conservative government positions itself for the UK’s next general election, taking tough action to deliver its (widely criticised) net migration targets are likely to supersede IES priorities.
2. Economic factors
With UK inflation still running ahead of many other OECD countries, living costs for all students are becoming much higher. With sterling certainly no weaker over the last 2 years against the currencies of the five focus countries referenced above, except for Saudi Arabia, affordability for many prospective international students is a challenge in this inflationary context. The crash of the Nigerian naira following the country’s abandonment of its long-standing currency peg against the US dollar will have impacted the cost of other destination countries as well, but unlike the UK the major competitors are less exposed to West Africa.
In a new report from a UK think tank, the Higher Education Policy Institute (HEPI), Josh Freeman presents research on how higher education institutions are supporting students hit by the cost-of-living crisis. The report states that: ‘concerns have been raised about international students, who sometimes arrive in the UK without enough money to fund their study and are limited by law to working no more than 20 hours a week during term time.’ It also underlines the lack of hardship funds available to them.
A tight market for student housing exists in many important university cities, including Manchester, Bristol, and Glasgow. Supply has struggled to keep up with demand. Demand from domestic students is set to increase in the next few years due to the demographic rise in the number of 18-year-olds, peaking in 2030. If more international students are to be welcomed to the UK, problems of accommodation availability must be factored into local and national strategies.
There is no overnight solution for tackling a country’s inflationary problems, although it is also argued below that international students are part of the solution to the UK’s productivity issues. Currency valuations are notoriously unpredictable. It is obvious that everyone who wants to cannot afford to study in the UK, and that there is insufficient capacity anyway. However, the government and HE providers can do much more, and more immediately, on the value for money/return on investment side of the equation. This brings us on to the question of what value the higher education sector delivers to students’ employment prospects and their future careers paths?
3. Student outcomes
That universities have limited data available on the career outcomes for international graduates is a subject often covered in-depth by Alan Preece in his entertaining and informative blog, A View from a Bridge and also by Louise Nicol of Asia Careers Group. Prospects for employment are undoubtedly a key driver of international student choice, and therefore a factor in the relative competitive advantage of an institution or a country.
A report in the PIE News highlights the Netherlands as a study destination where 32% of international students graduating from the 2018-19 cohort were employed in the country one year later. This was a substantial increase from the level of 20% seen previously. Nevertheless, the political backlash against the growing number of international HE students in the Netherlands (123,000 in 2022-23) may well reverse this trend, with the number of programmes taught in English being targeted for a cull.
If the UK and its universities want to remain competitive for international student recruitment, as defined in the IES, the sector needs to have visibility of student employment data and use insight from it to inform its future strategy. Universities should also invest more heavily in their international alumni engagement teams to better connect past and current graduates, creating opportunities for networking, investment, and employment.
Policy imperatives
The House of Lords Industry and Regulators Committee last week stated that many universities’ increasing reliance on international student fees, is a risk for the sector. The former Secretary of State for Education, Charles Clarke, questioned the sustainability of this approach as ‘countries around the world are building strong, world-class universities themselves,’ eroding one of the UK’s main competitive advantages, based in part on its past reputation. Exposure to China, with a reduced number of inbound students, is a particular vulnerability for UK providers. The committee highlighted a complacency in the sector in the face of such risks.
Rejoining Horizon Europe as an associate member, after years of stand-off with the European Union, is an unequivocally good news story for the UK and will bolster the finances of its leading research universities. But for the much larger number of UK universities that rely more heavily on student tuition fees, what are the policy solutions in the pipeline?
An insightful report entitled Passport to Progress: A Blueprint for the World’s Most Pro-Innovation Visa System, published by the Entrepreneurs’ Network is timely. With recommendations for improving migration systems, it examines students as one of five ‘groups’ of immigrants essential for economic growth and innovation (the others are high-skilled professionals, STEM practioners, other ‘unusually talented individuals’ and entrepreneurs).
The author, Derin Koçer, makes several important recommendations for student visa and immigration policy, amongst which are:
- Get rid of the sponsorship requirement for employers of international graduates, which will encourage more smaller businesses to recruit them
- Exclude such graduates from migration caps, in recognition of their value to the host country
- Redesign student visas so that the system puts international students on the path to residency
The battle for international talent is of critical importance to the future health of any country. The UK has a significant productivity problem, in part due to its ageing population, which stymies its economic growth prospects. Voluntary, skilled immigration fuels dynamic companies, enterprise, and innovation. Not all international students will stay on after graduation, but encouraging a clear route to the workforce, or to starting a business, under a clear set of regulations, will bring benefits to all citizens. If the UK is to play a role in the major industries of tomorrow, (artificial intelligence, green technology or another high-growth sector), it must bolster the number of its STEM graduates, of both domestic and international origin.
Conclusion
Many countries are on a non-linear journey in their strategy for welcoming international students. As well as in the Netherlands, even politicians in Canada are now questioning the ‘open border’ policies of recent years due to the current pressure on housing stock in the big cities that attract the largest student inflows. Despite its internal party-political issues in relation to immigration, The UK Government needs to see the bigger picture, and not simply think of international students as a solution to propping up the finances of universities.
HE providers, and government must work together to keep the UK’s education sector competitive. Welcoming international students with a robust plan behind delivering value to them, through a progressive immigration policy, and with a focus on graduate outcomes, is not just important for current export targets. It is an essential driver of the country’s future economic success.
