Written evidence submitted by BUILA (HEF0071)

Education Committee

Higher Education and Funding: Threat of Insolvency and International Students

About BUILA

1. The British Universities' International Liaison Association (BUILA) is a membership organisation that supports the work and professional interests of staff in international recruitment and liaison at UK higher educational institutions (HEIs).

2. BUILA currently has a membership of 147 UK higher education institutions with over 2,000 international recruitment professionals.

3. We work closely with government departments including the Department for Education, Department for Business and Trade and the Home Office and UK Visas and Immigration (UKVI) on international student recruitment.

Executive Summary

4. Our response focuses primarily on the Committee’s questions relating to the impact of government policy on international students.

5. This government’s positive rhetoric around international students has been welcomed by the sector, however, this needs to be matched by supportive policies. We are concerned that the proposed measures included within the Immigration White Paper, such as a levy on international student income, reducing the Graduate Route visa from 24 to 18 months and new recruitment compliance metrics, have added to the cumulative impact of recent years’ policy change to create a very challenging environment for higher education institutions. Collectively, these policies carry a high reputational risk for the UK as a leading global study destination and to universities’ finances.

6. Along with many of our colleagues across the sector, we are strongly opposed to a levy on international students, which will not, as assumed in the Government’s impact assessment, be passed onto students but instead cause further financial strain on institutions.

7. Whilst we are committed to robust recruitment practices, it is essential that the Government works collaboratively with the sector as it develops its proposals on compliance. The lead in time for these measures is crucial as changing admissions thresholds can only be done at the start of a new admissions cycle to avoid breaching Competition and Markets Authority (CMA) regulations. Importantly, many of these changes will require universities to rebase recruitment targets and therefore income on the basis of reduced recruitment, perhaps putting in place cost savings measures such as redundancy schemes - this could take up to a full admissions cycle due to trade union consultation.

8. Our latest member survey, from 12th June – 3rd July 2025, found that 61% of respondents reported a decrease in international postgraduate applications for September 2025 compared with September 2024, with an overall aggregate change of minus 11%. The trend is sharper for Russell Group universities where 76% of institutions reported a decrease in applications with an average decline of 16%.

9. This continues a trend of year-on-year declines in international enrolments which is likely to exacerbate current financial pressures for the majority of institutions.

10. Whilst university funding is a complex issue, any further decline in international students will have a significant impact on university finances including the cross-subsidisation of domestic student places, the viability of delivering certain high-cost courses, such as in STEM, and on universities’ research and development capacity. The basic compliance assessment proposals will cause institutions to become more risk averse and limit international student diversification strategies, adding further reliance on a small number of core markets, which are also impacted by falling demand. This will have a knock-on impact on our soft power, where it is often beneficial to be reaching higher risk markets as these are the very nations with whom we are seeking to develop stronger ties.

11. The Government’s proposed policies come across the backdrop of a changing global environment in which the value of being a Western or anglophone institution is carrying less value as Chinese universities rise up the global rankings. With international admissions falling in key competitor countries such as the US, Australia and Canada, there is an opportunity for the UK to be seen as stable and welcoming, which it should seized upon.

12. We are calling on the Government to work closely with the sector as it considers the implementation of the measures outlined in its Immigration White Paper to ensure that they are workable in practice and do not have unintended consequences on universities’ solvency and the global reputation of UK higher education.

13. We were grateful for the opportunity to provide oral evidence to the Committee’s first evidence session of this inquiry and would be pleased to do so again.

Impact of Government Policy on International Students

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

14. International students bring huge value to the UK in terms of economic, cultural and soft power benefits – supporting the Government’s mission for economic growth and position on the world stage.
15. However, policy turbulence over the last couple of years has had a significant impact on the number of international students studying here and the UK’s position as a leading global study destination.
16. This includes the introduction of restrictions on students bringing family members on the vast majority of courses and uncertainty over the future of the Graduate Route visa. These changes came against the backdrop of an increasingly hostile debate on immigration in which international students became wrapped up.
17. The majority (59%) of international students are postgraduate. The latest HESA data shows 253,475 undergraduate and 361,010 postgraduate international entrants at English HE providers in 2023 – 2024[1]. As a proportion of overall students, 71% of full-time postgraduates are international compared with just 17% of undergraduates. At the time of the previous government’s review of the Graduate Route visa, when the sector faced high levels of uncertainty, 9 in 10 universities reported a decline in postgraduate applications.

18. This government’s positive rhetoric around international students has been welcomed by the sector, however, this needs to be matched by supportive policies. The proposed measures included within the Immigration White Paper, such as a levy on international student income, reducing the Graduate Route visa from 24 to 18 months, and new compliance metrics, have added to the cumulative impact of recent years’ policy change to create a very challenging environment for higher education institutions in a competitive global market.

The current international student recruitment outlook

19. BUILA represents universities across the full range of mission groups, from Russell Group to modern universities. Our member surveys therefore provide a good cross-sectional insight into recruitment trends.

20. Our latest member survey, from 12th June – 3rd July 2025, found that 61% of respondents reported a decrease in international postgraduate applications for September 2025 compared with September 2024, with an overall aggregate change of -11%. The trend is sharper for Russell Group universities, where 76% of institutions reported a decrease in applications with an average decline of 16%.

21. Application volume can be a proxy for market demand. Postgraduate demand in the key markets of China and India is falling significantly. Over the last year, over 90% of institutions reported a decrease in postgraduate applications from China, with an overall decrease of -24%. Three quarters of institutions reported a decrease in applications from India, with an overall decrease of -10%.

22. Anecdotally, decrease in demand from India is in part in response to the Government’s policy changes, in particular the uncertainty over, and now proposal for, changes to the Graduate Route. This has reduced the UK’s attractiveness as a global study destination in terms of its post study work offer when compared to other destinations, with EU countries and New Zealand growing in popularity in this admissions cycle in direct response to UK positioning. For example, New Zealand has announced plans to double its international education market by 2034 by extending work rights. Moreover, concerns around the financial situation of UK universities are being reported in global press and this is leading to prospective students reconsidering their applications amidst unease about the outlook of UK institutions.

23. The decrease in Chinese applications comes as the quality of its domestic offering has improved. China has the third highest presence in the QS World University Rankings 2026, after the United States and the UK. 45% of Chinese institutions have climbed in rank over the year, with only 35% declining. As outlined by the British Council: “With over 60% of UK institutions seeing rankings fall and Chinese universities gaining ground, students may increasingly feel that high-quality education is available closer to home”[2]. 

24. In our member survey, universities also reported declines across postgraduate deposits - which can be seen as a strong indicator of final enrolment trends - across all mission group types. 63% of respondents reported a decrease in international postgraduate deposits for September 2025 compared with the previous year, with an overall aggregate change of -10%.

25. Again, this picture was amplified for Russell Group members, where 67% reported a decrease in international postgraduate deposits, with an aggregate 12% decline in September 2025 deposits compared to 2024. This includes year-on-year declines in China (-17%), Hong Kong (-12%), India (-16%) and Malaysia (-2%). 

26. The decrease in deposits combined with continued year-on-year declines in international enrolments is likely to exacerbate current financial pressures for the majority of institutions.

Sept 2025 Vs Sept 2024 postgraduate deposits by Mission Group

Respondents: Million Plus (5), Russell Group (15), The Cathedrals Group (1), University Alliance (6), Unaffiliated (23), GuildHE (4).

Year on Year Percentage Change of International Enrolments from 2020 – 2025 – BUILA Annual Survey Data

Autumn Intake International Enrolments from 2020 – 2025 – BUILA Annual Survey Data

The potential impact of the proposed measures in the Immigration White Paper

Levy

27. In the Immigration White Paper, the Government committed to exploring a levy on higher education provider income from international students, “to be reinvested into the higher education and skills system”. The proposal of an international student levy comes at a time of great financial and operational pressure for universities and will have a detrimental impact on the perception of the UK and student confidence.

28. The Government’s Technical Annex published alongside the Immigration White Paper outlines provisional analysis that suggests student visa demand could fall by up to 7,000 main applicants per year with a 6% levy, estimated to lead to a 1.8% fall in international postgraduate demand in the short-term. However, it does not provide an assessment on the impact on university finances and its analysis is based on the assumption that providers would pass on the cost of the levy to international students. This is not likely to happen in practice as there is a need to remain competitive on cost in an international market in which students are highly cost conscious. Along with many of our colleagues across the sector, we are strongly opposed to a levy, which represents another significant financial pressure at a time when universities are already under strain.

29. The White Paper outlines that the levy would be reinvested into the higher education and skills system. Universities already make significant contributions to this agenda.

30. This includes through the impact they have as an anchor institution driving regional growth in their area, where often they may be the main employer for a town or city. International students also already contribute directly through visa costs, the NHS surcharge and VAT.
31. A new report from Public First[3] has found that in every single constituency in England, international students raise domestic living standards – measured as the total increase in income per individual, and by the wage increase per working adult. It finds that:
• Every UK resident person is £355 a year better off on average as a result of international students. To arrive at this calculation, Public First looked at the economic impact of international students on increased income, profits and rent for every domestic individual in the UK, and the wage impact for UK workers, assessed per full time equivalent worker.
• Every UK resident working adult - on a full-time equivalent basis - is £466 a year better off on average as a result of international students. In 100 constituencies, international students bring direct wage benefits to full time domestic workers of more than two and half week’s worth of extra wages.
• There are more than 20 constituencies where the average person is more than £2,000 better off, and more than 60 where they are over £1,000 better off. These are broadly those with the highest ratio of international students to resident adults.
32. Universities also play a crucial role in delivering the skills needed for the future. They work closely with businesses, colleges and local government in their region and under the Government’s plans for Skills England, will play a key role in shaping local skills strategies to address regional skills gaps and labour market demand. Around 100 higher education institutions already offer degree apprenticeships, which combine paid work with learning practical skills and play a pivotal role in filling skills gaps.

33. The Unit for Future Skills has forecasted that 11 million new graduates will be needed by 2035. Indeed, as outlined by Universities UK[4]:

“As the government’s Industrial Strategy highlights, higher-level skills are essential for powering Priority Sectors. According to University UK’s analysis, seven of the eight Priority Sectors relied upon a higher proportion of graduates than the UK workforce as a whole.  But universities don’t just produce graduates; they’re hubs of research and innovation, engines of regional growth, and essential civic partners. Their offer is diverse: professional and technical degrees, vital skills development through the arts and humanities, and flexible lifelong learning through professional training. From degree apprenticeships to short courses, universities are adapting their provision to ensure people can access the right skills at every stage of life, whether that’s providing creatives with the technical skills they need, or providing the ‘soft’ skills which will become ever more important as automation advances.”

Basic Compliance Assessment (BCA) Metrics

34. The Government has proposed strengthening the requirements that all sponsoring institutions must meet in order to recruit international students, including through:
• raising the minimum pass requirement of each Basic Compliance Assessment (BCA) metric by five percentage points, so that – for example – a sponsor must maintain a course enrolment rate of at least 95% and a course completion rate of 90% in order to pass the compliance threshold
• implementing a new Red-Amber-Green (RAG) banding system to rate the BCA performance of each sponsor.
35. BUILA supports robust recruitment practices and the need to reduce risk and will continue to work with government to deliver this. However, there is a need to ensure that the Government’s proposals are workable in practice and don’t undermine existing recruitment strategies.
36. The lead in time for these measures is crucial as changing admissions thresholds can only be done at the start of a new admissions cycle to avoid breaching Competition and Markets Authority (CMA) regulations. Importantly, many of these changes will require universities to rebase recruitment targets and therefore income on the basis of reduced recruitment, perhaps putting in place cost savings measures such as redundancy schemes - this could take up to a full admissions cycle due to trade union consultation. Universities will also need to consider new recruitment strategies including new degree programmes to target new markets, new international partnerships and conducting the necessarily due diligence.
37. For these reasons, 2027 – 2028 is the earliest viable point for the measures to be introduced so that institutions can plan accordingly – recruitment policies will already have been set for 2026 – 2027 academic year, with UCAS welcoming applications for the September 2026 intake from 1st September 2025.
38. In addition, there is real concern amongst institutions over the proposed traffic light system being published publicly. Primarily, the risk is that this rating for visa rejection rates and non-enrolment is conflated by prospective students and overseas markets as a judgement on course delivery, student experience and graduate outcomes, all of which are already publicly available measures and of greater interest for students and their families. There is also concern that receiving an amber rating would ultimately have the same impact as having a red one in terms of the perception from prospective overseas students. Institutions being ranked as ‘red’ or ‘amber’ will damage the whole UK sector and reduce confidence and trust in UK HE as a brand.
39. Instead, BUILA and others are calling for the traffic light system to be an internal measure of performance so that universities can work with the government to improve through action plans where required and only progress to red if the actions are not completed after an agreed time period.
40. Enhanced data sharing is also critical for these measures to be a success. BUILA would welcome closer working with UK Visas and Immigration (UKVI) to share information in real time. For example, often universities only learn of a sector-wide compliance issue after the fact so they are not able to look out for it when reviewing applications. This leads to situations where universities may be penalised through BCA metrics when they were not aware of compliance issues at the point of issuing CAS and sponsoring the student. Similarly, sometimes universities only find out after UKVI that a student has switched visa or left.
41. Another consideration is that non completion rates are influenced by a range of factors. For example, institutions might want to remove students from programmes for reasons of academic progression or unsustainable fee debt. Reducing the threshold for this metric creates the unintended consequence of incentivising universities to retain these student groups on programme when they should be removed to protect quality. We are calling on UKVI to exempt students from completion metrics where they have been removed from their programme for legitimate reasons.
42. There should be positive, joined-up messaging between government and the sector on how these proposals actually put the UK above competitors and protect students – a further concern is that the media just focus on failures and damage to the UK brand, which is then picked up overseas.
43. In terms of the impact on university finances, the BCA proposals will cause institutions to become more risk averse and limit international student diversification strategies, adding further reliance on a small number of core markets, which are also impacted by falling demand.
44. At a recent BUILA forum of international directors, nearly two thirds of respondents said that the BCA metrics would impact or significantly impact student and course diversification objectives.

The impact on universities’ financial stability

45. Whilst university funding is a complex issue, any further decline in international students will have a significant impact on university finances and cross-subsidisation of domestic student places.
46. The Migration Advisory Committee Rapid Review of the Graduate Route[5] noted that universities make on average 31p for every pound spent on teaching international students, whilst domestic teaching makes an 8p loss for every pound spent.
47. It outlined that international fees account for 22% of total university income for those ranked in the global top 100 and slightly higher at 23% of total income for those ranked 1,000+.
48. The Migration Advisory Committee report also confirmed that universities use a significant portion of international fees to subsidise research activity – “research-intensive universities use a substantial portion of the surplus made on international teaching to subsidise research, which accounts for a significant proportion of their activities, and on which they lose 27p for every pound spent” -  as well as higher cost courses to deliver such as those in STEM subjects. It outlined:

“If universities need to respond to reductions in international student fees it is more likely that they will cut activity in the subjects that cost them more to teach and make larger losses on per domestic student…Courses such as STEM would likely be less financially viable to run without international students and this could impact the availability of these courses to domestic students.”

49. A reduction in international student numbers would therefore impact universities’ ability to support domestic student places, deliver high-cost courses, and lead to reductions in world-leading research and development.
50. Ultimately, we need a long-term funding solution for higher education that reduces universities’ reliance on international student fees whilst continuing to support the sustainable recruitment of international students given the significant cultural, economic and soft power benefits they bring to the UK. 

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

51. Each international student brings about £100,000 of net economic benefits to the country[6]. Collectively, the research estimates that the total benefit to the UK economy from 2021/22 first-year international students over the duration of their studies was approximately £41.9bn, while the estimated total costs were £4.4bn. This implies a benefit-to-cost ratio of 9.4. This takes into account the costs associated with public healthcare, housing and education received by dependent children, although the Government’s restrictions on dependants since then means this element will now be minimal[7].

52. As outlined by the Public First research above, this translates to financial benefits for each individual in the UK, but particularly so in those constituencies with the highest ratio of international students to resident adults.

53. Universities are often the main employer in their town. Across the UK, a number of universities have confirmed redundancies and course closures. Some have said that they are aligning staffing to a downturn in recruitment and others have explicitly confirmed that declines in international student numbers are a major factor in these decisions. For example:
• Aberystwyth has cited the downturn in international recruitment as a major factor in looking to cut 200 jobs, reducing staff by 8 – 11%.
• Bedfordshire has announced plans to cut nearly 240 jobs and has said that this is caused primarily by a drop in international student recruitment.
• Essex is cutting 200 jobs to tackle a financial shortfall of £29m. The university said that government decisions on international students had contributed to the “considerable strain” felt by the university.
• Sheffield Hallam announced that up to 400 jobs could be lost as it responds to external pressures. It said: “In particular, the government’s actions to reduce the overall number of international students in the UK - despite the many economic and cultural benefits they bring - is making the financial picture for universities much worse."

54. In addition to their contribution to university finances, international students also support the NHS through paying an annual health surcharge. In 2022-23, this was £470, equating to a cash injection of £357 million based on total international student enrolments of 758,855 that year[8]. In February 2024, an increased surcharge came into effect of £776 for international students – a 66% increase - and £1,035 for those on the Graduate visa. It is estimated that this now equates to over £500 million per year for the NHS[9]. The international student population is typically healthy, and many students also have full private health insurance. The surcharge therefore represents a significant contribution to the NHS that outweighs the use of services by this young demographic.

55. Looking at the wider contribution that international students bring to their communities, we know that many BUILA members work closely with local leaders, service providers and businesses within their region on education and skills, accommodation provision, filling jobs gaps and volunteering with local charities and organisations. There are a number of case studies available on BUILA’s website[10].

September 2025