Higher education institutions in England have predicted their income from international student fees will hit £4.8bn by 2018/19, a third more than in 2014/15, according to the Higher Education Funding Council for England. However, the funding body has warned the increase may be based on overly optimistic forecasting of international student growth.
International student fee income reached £3.6bn in 2014/15, representing 12.7% of HEIs’ total income, according to the report, showing how critical this source of income is to the financial health of the UK’s higher education sector.
The estimated growth in international student numbers “[suggests] an over-confidence by the sector”
The report provides an analysis of universities and colleges’ projected financial performance, which each institution is required to submit to HEFCE in order to receive state funding.
Added together, these projections amount to an anticipated increase in international student fee income of 33.7% over the four-year period to 2018/19. This means a real-terms increase of 26%.
The data also shows the sector as a whole expects international student fees to swell, accounting for 14.9% of total income by 2018/19.
However, the report calls into question whether this steep rise in fees is possible. The forecasted increase is based on an estimated annual growth in international student numbers of between 1.8% and 5.8%, which the report argues “[suggests] an over-confidence by the sector in student number forecasts”.
In 2014/15, non-EU student growth stood at just 1%, after a 1% drop the previous year.
And the report points to UCAS data that suggests acceptances for overseas students are 1.1% lower in the 2016/17 cohort than in the previous intake.
This is lower than the figure institutions forecasted for 2016-17, and again “suggests a degree of over-confidence”, HEFCE reiterates.
“Of particular concern is that universities and colleges are projecting high levels of growth in the numbers of home, EU and international students in an environment which may make this increasingly difficult to achieve,” it states.
Recruitment for overseas students is becoming more competitive as alternative study destinations increase their market share, which may be exacerbated by future changes to immigration regulations that make it more difficult to recruit international students, it explains.
Meanwhile, the UK’s impending exit from the EU may create a further challenge for international recruitment, it adds.
Although the government has confirmed EU students beginning their studies at an English university or college in 2017/18 will be able to access student loans and grants for the duration of their course, it’s uncertain how incoming students from the EU will be affected beyond that point.
Nevertheless, the drive to increase international students is “not surprising”, noted Philip Walker, a spokesperson for HEFCE.
“The contribution (both financial and non-financial) that overseas students make to the UK HE sector is very valuable,” he said – a point echoed in the report.
“The contribution (both financial and non-financial) that overseas students make to the UK HE sector is very valuable”
“Institutions are becoming increasingly reliant on overseas fee income to contribute to the full economic costs of their teaching and research operations (for the benefit of all students) and to ensure that they can continue to be financially sustainable,” it notes.
As well as making up 14.9% of total income, non-EU student tuition fees are expected to account for 27.5% of all tuition fee and education contract income in three years’ time.
HEFCE’s modelling that removes the projected growth in overseas student fee income shows it “would all but wipe out sector surpluses by 2018/19”.
In the projections submitted to HEFCE, institutions collectively estimated a surplus of £1.08bn by 2018/19; but if the projected rise in overseas student fee income is discounted, this figure drops to £56m.
“Overall, there is a growing risk that the sector will be unable to deliver the level of growth of non-EU student numbers projected in their forecasts,” the report warns.
“This would have a significant adverse impact on the sector’s income and surplus projections.”
In one of few positive points put forward by HEFCE, however, the report suggests that the devaluation of the pound may give international student recruitment a boost.
