Fluctuating overseas income fuelling ‘winner takes more’ divide

Income from overseas student fees in England is increasingly being absorbed by a handful of elite universities, as experts warn that a “winner-takes-more” market is fuelling inequality.

Recent data from the Higher Education Statistics Agency (Hesa) shows that English members of Universities UK (UUK) took in £9.9 billion in tuition fee income from overseas students in 2024-25.

This was up slightly from £9.8 billion the year before but the benefits were not felt evenly across the sector.

Overseas tuition fee income rose 6 per cent among the Russell Group but it fell 4 per cent elsewhere.

It means the 19 English members of the research-intensive grouping included in the data increased their share of the total fee revenue from 52 per cent to 54 per cent.

The University of Nottingham did not submit detailed data on time to Hesa but its accounts show it also saw an increase in international student income last year.

Diana Beech, professor of higher education and director of the Finsbury Institute at City St George’s, University of London, said revenue was increasingly being “absorbed by a small group of research-intensive universities with strong global reputations”.

“Brand and scale are clearly driving a ‘winner-takes-more’ market, not just between the Russell Group and the rest but also within the Russell Group itself,” she told Times Higher Education.

The six largest universities all increased their income last year – UCL (up by £98 million), the University of Manchester (£52 million), King’s College London (£56 million), Imperial College London (£52 million), the University of Birmingham (£91 million), and the University of Oxford (£34 million).

They took in £2.8 billion between them, which is 28 per cent of the national total – up from 24 per cent in 2023-24.

But others, including the universities of Leeds (down by £54 million), Sheffield (£47 million) and Southampton (£22 million) went in the opposite direction.

Vincenzo Raimo, an international higher education consultant, said institutions with strong brands and high-demand subjects such as business, computing and engineering appear to have retained pricing power and continued international demand even as the wider market has softened.

“The result is likely to be an increasingly uneven financial landscape across UK higher education,” he said.

“A small group of institutions may continue to generate very significant international surpluses, while others face rising recruitment costs, weaker pricing power and growing pressure on margins.”

Some institutions, such as Imperial, now take in 81 per cent of their total tuition fee income from abroad, while it fell to just 38 per cent at the University of York.

But with the figures only showing the picture in 2024-25, experts fear that the environment has become more challenging since then – even for so-called elite institutions.

Recent data from the Home Office shows that the number of study visas granted to undergraduate students fell 24 per cent in the first quarter of the year – but this was just below the average of the previous five years.

The number of visas for master’s students plummeted 35 per cent – an income stream on which less selective universities are more dependent.

Janet Ilieva, international education specialist and founder of consultancy Education Insight, said these markets are more exposed to affordability pressures, currency depreciation, visa policy changes and shifts in the perceived value of post-study work.

“Universities with stronger global brands recruit from less price-sensitive student markets and are better able to protect income when recruitment conditions tighten.

“Institutions more dependent on price-sensitive PGT recruitment are much more exposed to fluctuations in student demand, particularly from price-sensitive countries.”

The government will begin charging universities a £925 levy per international student for each year of study from August 2028. It has faced accusations that a flat fee favours elite institutions.

THE’s analysis shows that, despite taking in the majority of income (54 per cent) from international tuition fees, the Russell Group would pay less than the rest of the sector in levy taxes.

Raimo said the levy risks accelerating the creation of a “two-tier sector”, where internationally dominant universities continue to grow while some institutions conclude that certain forms of international recruitment are no longer worth it.

Nicholas Dillon, director at consultancy Nous Group, said the few institutions that can increase international revenue are “jumping at it”. But he warned that the flat fee levy threatens to push lower fee providers out of the international student market.

“Providers with lower fees may also pay generous scholarships and discounts and substantial agent commissions…add this to other interventions, like the Basic Compliance Assessment changes, and we see government-induced bifurcation in the sector.”

patrick.jack@timeshighereducation.com