Written evidence by Destination for Education (HEF0066)

Education committee

Higher education and funding: The threat of insolvency and international students

Introduction

Destination for Education welcomes the opportunity to respond to the Education Committee’s inquiry into Higher Education and Funding: Threat of Insolvency and International Students. Our response focuses on questions relating to the impact of government policy on international students and the ramifications of institutional insolvency and regional impact.

About Destination for Education

Destination for Education is a coalition of the six leading pathway providers that prepare international students for successful study at British universities (INTO, Kaplan, Cambridge Education Group (CEG), Navitas, Oxford International, and Study Group).

Pathway providers prepare international students for study at UK universities. We help international students to develop the study and language skills they need to succeed at degree level which they have not had the opportunity to attain in their local education systems, partnering with universities across the UK. This includes the University of Manchester, University of Glasgow, Durham University and the University of Brighton. A full list of these institutions can be found in Appendix A.

Response

Impact of Government Policy on International Students

How will current Government policies affect the financial stability of higher education institutions?

The financial stability of the UK’s higher education sector is coming under increasing strain due increasing operational costs, inflationary pressure and capped domestic tuition fees.

As well as this, international student fees are a key in supporting the sector’s financial health, however, government policies on student visa restrictions are at risk of dampening international student demand. This, coupled with the proposed higher education institution levy, means that government policy is putting the financial stability of the higher education sector at risk. Recent analysis has shown that the net impact of government policy decisions will be a £1.4 billion reduction in funding to higher education providers in England in 2025-26 [1].

We have outlined below the impact of these policies on the financial stability of the higher education institutions and our recommendation of the policy changes needed to support and strengthen the financial stability of higher education intuitions.

Dependents Visa

The removal of the Dependents Visa disproportionately impacts international students with children, particularly female students, as well as those from cultures where female students often must travel with a chaperone or family member.

Recommendation: We urge the Committee to call on the government to conduct a review of the impact removal of the Dependents Visa, particularly for prospective female students and students from cultures where female students must travel with a chaperone or family member.

Graduate Route Visa

The total net benefit to the UK Exchequer of hosting Graduate Route visa holders in the first full year of the scheme (2022/23) is estimated to be £70 million (or £1,240 per international graduate)[2]. However, the Government’s decision to scale back the Graduate Route Visa from 24 months to 18 months will likely reduce demand and make the UK a less competitive destination for international students to choose globally, curtailing this vital income stream for higher education institutions.

Recommendation: We urge the Committee to call on the government to:

Make assurances to overseas markets that the UK is committed to maintaining the Graduate Route Visa at 18 months and there are no plans to reduce it further.
Confirm the timeline of the Immigration White Paper changes and when changes to the Graduate Route Visa will come into effect.

Net migration figures

International students are temporary migrants and vital for boosting economic growth. Due to this, we recommend that the net migration figures are presented differently, specifying how many of the net migration figure includes international students who are temporary migrants and responsible for economic growth. This would send a clear message to prospective students that the UK welcomes international students and sees them as an integral part of the economy. This messaging would help boost the financial viability of education institutions.

Recommendation: We urge the Committee to recommend that ONS figures are:

Broken down to specify international students as temporary migrants and responsible for economic growth.
Presented with a breakdown of other visa schemes such as the Afghan Citizens Resettlement scheme and the Hong Kong BNO scheme.

Levy on Higher Education Institutions

The government set out in its Immigration White Paper the plan to explore a levy on higher education institutions. This would be incredibly detrimental to the financial stability of higher education institutions, that are already grappling with increasing financial pressures as outlined above. A levy would also divert essential funds from teaching, research and student support services and as well as putting the financial health of institutions at risk could take away vital funds that are invested into world-leading research and ensures the UK is a prestigious place to study. Recent research has shown that the estimated net impact of this proposed levy could cost the sector £600m per year [3].

Recommendation: We urge the Committee to call on the government to scrap the plan to explore a Higher Education Institution Levy.

How will the interaction between international student enrolment and tuition fees shape the sector’s financial outlook?

It has been widely reported that the education sector’s financial outlook is worsening, exacerbated by the student visa policy environment which has made the UK a less attractive place to study, globally, negatively impacting this key revenue stream for most education institutions.

Dundee University is reportedly on the “brink of collapse”, with plans to make 632 staff redundant (a fifth of its workforce)[4]. As well as job losses, their recovery plan reportedly proposes cutting modules from courses and expensive research. Their structural deficit in part is credited to lower revenues from fewer international students.
Cardiff University confirmed it would be cutting 400 full-time positions due to escalating financial pressures [5]. Professor Wendy Larner, the vice-chancellor of Cardiff University, said the institution needed to “take difficult decisions” due to “declining international student applications and increasing cost pressures, and the need to adapt to survive”.
One in four leading UK universities are cutting staff numbers and budgets, leading to calls for action to avoid damaging the education sector’s international standing [6]. Universities that rely on international student fees are cited as some of those impacted by the government’s visa changes.

The relationship between international student enrolment and tuition fees is central to the financial outlook of the UK higher education sector. As domestic tuition fees remain capped and public funding continues to lag behind inflation, international students play a critical role in stabilising university budgets, cross-subsidising research, and maintaining the quality and breadth of educational offerings.

Ramifications of Institutional Insolvency & Regional Impact

What would be the consequences of a higher education provider becoming insolvent?

The consequence of higher education providers becoming insolvent would have huge ramifications for the UK economically as well as eroding the UK’s soft power and business ties with the world.

Economic benefits at risk

As outlined above, poor economic health of higher education providers, in part drive by dampening demand from international students, can result in large-scale job cuts which have huge implications for the economic health of local business and services. The economic benefit of international students to the UK economy is almost £42bn [7] and on average, each parliamentary constituency in the UK is £58m better off because of international students, which is equivalent to around £560 per citizen. This positive economic impact is at risk if higher education providers were to become insolvent.

Erosion of soft power

Insolvency of higher education providers would also erode the UK’s soft power, which in part has been driven through the UK’s international student becoming business and world leaders. The UK’s soft power is intrinsically tied to the health of its education providers and the ability for international students to study here.

For instance, latest figures show that 58 serving world leaders received higher education in the UK [8]. This exposure to British values and the relationships these world leader build with domestic students during their studies fosters soft power and is helpful for the UK’s diplomatic ties.

Detrimental to business links

International students often forge deep connections with the peers they meet and the cities they live in that translates to business relationships and trade ties. A study by Universities UK found that 77% of international student respondents said they were more likely to do business with the UK as a result of studying in the UK [9].

Recommendation: We urge the Committee to invite HMT to give oral evidence to the inquiry to outline the economic impact of the current policy environment.

How do higher education institutions contribute to growth in their local economies, the provision of public services, and their wider communities?

As stated above, the economic benefit of international students to the UK economy is almost £42bn [10] and, on average, each parliamentary constituency in the UK is £58m better off because of international students, which is equivalent to around £560 per citizen. This positive economic impact is at risk if higher education providers were to become insolvent.

International students also tend to have a net positive benefit on public services. For example, each international student pays the NHS surcharge which is currently £776 per year. In 2021/22, the annual cost per student or dependent to the health service was £232, making international students a substantial net contributor to the NHS. If the UK had no international students, the NHS would lose £2.5Bn of funding - the Immigration Health Surcharge raises around £500m of this total [11].

Research also shows the total net benefit to the UK Exchequer of hosting Graduate Route visa holders in the first full year of the scheme (2022/23) is estimated to be £70 million (or £1,240 per international graduate [12].

What strategies should be implemented to prevent insolvency and ensure sustainable regional provision of courses?

As well as the recommendations outlined above, a key strategy to prevent insolvency is the International Education Strategy. This has huge potential to promote the UK’s economic growth agenda and prevent insolvency for higher education institutions. However, a clear cross-departmental strategy for sustainable growth is needed to ensure that we send a clear signal to the world that the UK remains a prestigious and desirable destination to study. This is vital for the financial viability of higher education institutions.

Recommendation: Develop a clear, cross-departmental strategy for sustainable growth of education exports in partnership with the education sector. This should be sponsored by all relevant Departments (Home Office, DBT and DfE) and include proposals to:

Create long-term growth targets for education exports that are sustainable and broken down regionally to better demonstrate the economic impact. This fits with the government’s growth agenda, which aims to reduce regional inequalities. By breaking growth targets down into regions, we can show how international students contribute to local economies and drive job creation, ensuring a more equitable spread of benefits.

Develop a sustainable growth plan that includes accommodation and services for international students. As part of the government’s broader growth strategy, supporting international students through infrastructure and services creates lasting economic value, not only in education but also in housing, local services, and job creation. This is also key to ensuring the UK remains a competitive destination.

Allow blended degrees, combining online and in-person learning, to increase the attractiveness of studying in the UK. This proposal supports the government’s goals of innovation and flexibility in education. By making higher education more accessible and attractive through online and in-person hybrid models, the UK can tap into a wider international market, increasing the number of international students and driving growth. It also addresses capacity constraints in the UK and is proven to be beneficial for non-native English speakers.

Review annually the UK’s competitiveness in the global education market to stay ahead of international trends. Ongoing reviews would ensure the UK stays competitive in the face of evolving global dynamics. This ties directly into the government's agenda of maintaining the UK’s global leadership and adapting to the ever-changing landscape of international education.

Assess priority countries annually to respond to shifting global demographics and maintain competitiveness. The government’s global outlook can be better supported by adjusting priorities based on market changes. Regularly reviewing which countries are a priority ensures the UK remains agile in its recruitment of international students, which is vital for both economic growth and global partnerships

Appendix A

CEG’s university partners	University of Southampton University of Central Lancashire Birkbeck, University of London University of Hull University of Sunderland University of Reading London South Bank University Aston University Loughborough University
INTO’s university partners	University of East Anglia University of Exeter Newcastle University The University of Manchester Queen’s University Belfast City, University of London University of Lancaster University of Stirling
Kaplan’ International Pathways’ university partners	University of Nottingham University of Glasgow University of Liverpool University of York University of Bristol University of Essex University of the West of England, Bristol Bournemouth University Nottingham Trent University University of Brighton University of Birmingham Queen Mary University of London University of Westminster City, University London Cranfield University
Oxford International’s university partners	University of Greenwich University of Dundee University of Bradford Bangor University De Montfort University Edinburgh Napier University University of Kent
Navitas’ university partners	University of Hertfordshire Brunel University London Swansea University Anglia Ruskin University University of Portsmouth Robert Gordon University University of Plymouth Birmingham City University University of Northampton University of Leicester University Academy 92 (UA92) Keele University
Study Group’s university partners	Durham University Cardiff University University of Huddersfield Kingston University, London Leeds Beckett University Liverpool John Moores University Royal Holloway, University of London The University of Sheffield Teesside University University of Aberdeen University of Leeds University of Strathclyde University of Surrey University of Sussex

September 2025