Universities may need to cut courses to reduce costs as a decline in overseas student applications, following an immigration crackdown, has led to significant financial losses, according to the higher education regulator.
Home Office data released Thursday revealed a £1.5 billion loss in university income, with overseas student applications dropping by 15.9%—equivalent to 70,200 fewer visa applications—since the Conservative government introduced restrictions in January preventing foreign students from bringing dependents to the UK.
The Office for Students (OFS) estimates that nearly three-quarters of universities will face financial difficulties next year, even with the Labour Government's decision to raise tuition fees.
Sir David Behan, chairman of the OFS, stated that while no universities are at immediate risk of insolvency, the sector requires "radical reimagining" to mitigate future risks.
He recommended universities consider transforming their offerings, including reducing the length and variety of courses, and expanding degree apprenticeships. These programs, funded primarily through levies on large employers, allow students to work while studying, reducing their debt burden.
He urged universities to collaborate more, consider mergers, and assess whether nearby institutions offer overly similar courses, noting it “doesn’t make sense” for them to compete.
While encouraging course reductions, he emphasized avoiding “cold spots” where rural students lack local course options.
Tuition fees in England will rise by £285 to £9,535 annually for full-time degrees starting autumn 2025. However, the OFS projects that 40% of universities will face financial deficits in 2023/24. By 2025-26, 72% could outspend their income, relying on overdrafts or reserves, with a total sector deficit forecast of £1.6 billion.
This mirrors the £1.5 billion income loss from declining overseas student numbers, who account for a fifth of university revenue. Foreign students, contributing an average of £22,000 each, subsidize UK undergraduate teaching and fund research.
The Home Office data showed that the number of overseas students’ applications fell from 442,900 in the year to November 2023 to 372,700 in the year to November 2024.
It means that the Government is set to miss its target of 600,000 overseas students in a year for the first time since Boris Johnson introduced it as part of his international education strategy. Foreign students are estimated to generate nearly £40 billion for the UK economy.
The number of dependents of students seeking visas fell even more dramatically, from 137,400 in the 11 months to November 2023 to just 20,400, a drop of 85.2 per cent.
Overall, visa applications for workers and students are down 39.4 per cent since 2023, with 635,300 seeking to come to the UK in the first eleven months, compared to 1,048,600 in the previous year. This was driven by a 29 per cent fall decrease in main applicants and a 57.1 per cent fall in dependents.
The figures suggest immigration is on course to fall by 300,000 following measures including bans on foreign workers and students bringing dependents, increases in the skilled worker salary threshold from £26,200 to £38,700, and curbing shortage occupation visa schemes.
Data released by the Office for National Statistics (ONS) two weeks ago showed that net migration peaked at a record 906,000 in the year ending June 2023, before falling by 20 per cent to 728,000 in the year ending June 2024.
Sir Keir Starmer has pledged to retain nearly all the Tories’ measures as part of his efforts to reduce the UK’s reliance on foreign workers.