UK universities ‘foolish’ to bank on overseas student growth

Several UK universities appear to still be banking on increasing their international student numbers despite immigration crackdowns and lower profit margins casting doubt on whether overseas recruitment can continue to shore up the finances of a struggling sector.

With demand to study in the UK continuing to fall, many universities are investing heavily in international student recruitment, in a sign they are hoping to grow – or recover – overseas cohorts.

Last November, the University of Edinburgh – which is currently attempting to cut £140 million from its annual budget – posted a tender worth £825,000 for a company to support its overseas presence in a bid to “enhance its international student recruitment activity” in South Asia. 

Meanwhile, Sheffield Hallam University announced a new partnership in March with Oxford International to establish a new College of International Education to support the university’s “international growth ambition”. 

In the same month, the University of Bath unveiled a new 10-year agreement with Study Group to create an on-campus International Study Centre to “support the university’s international student ambitions”.

Not every institution is banking on growth, however.

“Whilst we might want to grow those numbers, I think any sensible institution is having a much more prudent approach as to what those numbers look like [and] how realistic it is to achieve those,” said Richard Emes, pro vice-chancellor research and international at Nottingham Trent University. “We don’t have a strategic intention that we are growing our student numbers over x number of years.”

David Bell, vice-chancellor of the University of Sunderland, said it would be “foolish” to bank on international student growth, “but it can form part of an overall strategy to diversify income”.

“That has been our approach in Sunderland, but has been coupled with rigorous cost control and, where necessary, cost reductions,” he said.

In part, universities’ more cautious approach is due to incoming visa compliance rules, which look set to make mass international student recruitment an increasingly risky business. 

Under the red-amber-green rating system for visa compliance proposed by the Home Office, providers that receive an amber rating could have their Confirmation of Acceptance for Studies (CAS) allocation capped at the same level as the previous year – in effect freezing the number of international students a university can recruit. 

What’s more, universities could be classified as amber if they fall within 1 per cent either side of the acceptable threshold – meaning even those institutions that are compliant may not achieve a green rating and could be subject to number controls. 

“I think that many [vice-chancellors] will be revising downwards their expectations about international student recruitment for next year,” said David Maguire, vice-chancellor of the University of East Anglia. 

“That’s partly because of changing market dynamics, and the war in the Middle East…is not helping, of course, but also the UKVI is doing its absolute best to dampen demand and also hold back study visas.”

Universities have had to contend with rising visa refusal rates and, they claim, increasingly spurious reasoning by Home Office officials for rejecting students. 

In response, many have withdrawn from so-called high-risk markets. While it may be necessary to remain compliant, doing so is making it harder for universities to grow their international student recruitment as traditional source countries are no longer the reliable source of students they once were.

With places like India and China increasing their domestic higher education capacity and policy changes, like a shorter graduate visa, decreasing the appeal of the UK to foreign students, “we’ve tended to look, as the UK, to higher-risk markets,” said Emes. “But those, of course, are the markets that are then under greater scrutiny.”

As well as withdrawing from higher-risk markets, many universities are increasing the pre-screening of students they recruit and closely scrutinising the agents they work with. 

“We’ve returned quite a lot of deposits from students from high risk countries…which has resulted in millions of pounds of student fees being foregone as a consequence of seeking to stay within the visa compliance thresholds,” said Maguire. “We are not, I think, unusual in that.”

The extra costs associated with these compliance measures come at a time when international students are already becoming less profitable for institutions. 

Universities pay out millions of pounds in commission to education agents and English institutions will soon be charged a levy for every international student they recruit. And as global competition heightens and the appeal of the UK appears to be dulling, universities are increasingly discounting fees to entice prospective students. 

While higher-ranked institutions can continue to maintain higher fees with limited discounts, “those in the middle have to play a pretty smart balance between their ranking…and the net fees they charge,” said Maguire. 

Those at the other end of the spectrum “are really discounting hugely in order to seek to attract students”, he added. 

Vincenzo Raimo, an international higher education consultant, said it was “striking” how many institutions “still lack a clear view of what an additional international student is really worth once scholarships, discounts, agent commission and other recruitment costs are taken into account”. 

“The old assumption that more international students automatically means more financial relief looks much less secure if growth brings higher compliance risk, higher acquisition costs and weaker net revenue than people might assume,” he continued. 

“I do think growth is still possible, but I suspect the era of volume as a rescue plan has come to an end.”

helen.packer@timeshighereducation.com