UK Universities Face £620 Million Blow Under Proposed International Student Levy

The UK’s higher education sector is bracing for a major financial shock as the government proposes a 6% levy on tuition fee income from international students. The measure, set out in the 2025 immigration white paper, is intended to redirect university revenue into domestic education and skills training. While the government presents this as a reinvestment in the UK’s workforce, university leaders warn it could damage the country’s ability to attract international talent and sustain world-class research (PIE News).

Potential £621M Annual Loss for England

Analysis by the Higher Education Policy Institute (HEPI) shows that universities in England alone could face losses of about £621 million annually, based on £10.3 billion in total international tuition income. University College London could lose around £42 million, the University of Manchester £27 million, and both King’s College London and Imperial College London £22 million each. Oxford University is projected to see a reduction of £17 million. If extended across the UK, the losses could rise to £728 million, with Scottish universities potentially losing £85 million a year (The Guardian, PIE News).

Few Options for Universities

Universities have warned that their choices are limited. They could absorb the cost, which would likely result in cuts to teaching, research, and student services. Alternatively, they might increase tuition fees for incoming international students to offset the shortfall, a move that could make the UK less competitive compared to other study destinations. Sector leaders argue that either option would have serious long-term consequences (The Guardian, PIE News).

Strong Opposition from Sector Leaders and Politicians

The proposal has been met with strong criticism from across the sector. London Mayor Sadiq Khan has described it as “an act of immense economic self-harm,” pointing to the £12.5 billion annual contribution that international students make to the capital’s economy. Universities UK has also urged the government to rethink the levy, stressing that it comes at a time when institutions are already facing falling enrolments due to stricter visa rules (London City Hall, Study Abroad News).

Impact on Research and Student Numbers

International students currently provide about 45% of tuition fee revenue in England, much of which is used to subsidies research and bridge a funding gap of around £6.2 billion. The Home Office estimates that the levy could lead to 14,000 fewer international students each year, though universities fear the real decline could be much higher. A significant drop in numbers would not only impact income but also diversity and global engagement in UK campuses (The Guardian).

Additional Policy Changes on the Horizon

Alongside the levy, the white paper proposes cutting the post-study work visa for international graduates from two years to 18 months and tightening compliance requirements for universities. The government has promised that funds from the levy will be reinvested into domestic education and skills, but details are expected only in the autumn Budget. Many in the sector remain skeptical about whether this reinvestment will offset the broader negative effects (PIE News).

A Crossroads for UK Higher Education

As the debate unfolds, the higher education sector finds itself at a critical juncture. Supporters of the levy argue it will help balance resources in favour of domestic students, while critics warn it could erode the UK’s position as a leading global education hub. The coming months will be key in determining whether the proposal moves forward and how universities will adapt to the potential financial and reputational impact (Study Abroad News).