Universities in the United Kingdom (UK) face growing financial concerns due to a significant drop in international Student visa applications.
The decline, representing the largest drop in more than 20 years, caused widespread concern across the industry.
The latest UK Home Office data shows that there were only 368,500 primary and dependant student applications from January to September this year.
This represents a 31 percent drop from 533,400 during the same period last year.
From July to September 2024, there was a 16 percent drop in sponsored Student visa applications compared to 2023.
There were only 263,400 from 312,500 in the same period last year, down 49,100 compared to the same three months in 2023
The sharp decline is concerning because this period usually sees a surge in applications as students prepare for the new academic year.
Additionally, Home Office data shows an 89 percent drop in visa applications for dependants of international students.
During the same period from July to September 2024, the number of international student applications dropped from 59,900 last year to 6,700.
Drop in Student visa applications’ financial impact on UK universities
International students have been a critical source of revenue for UK universities.
They pay much higher tuition fees than domestic students, whose fees are capped by the government.
On average, international fees contribute close to 20 percent of the total income for many universities.
This amounts to approximately £11 billion in revenue across the educational sector, Times Higher Education reported.
The recent sharp decline in visa applications is looking to lead to severe financial losses.
The Institute for Fiscal Studies (IFS) estimates that a 16 percent drop in international student numbers could result in a revenue loss of up to £1 billion next year.
This financial strain comes as universities are already grappling with frozen domestic tuition fees and rising operational costs.
Nick Hillman, director of the Higher Education Policy Institute (HEPI), expressed concern about the broader implications.
“These hard numbers confirm our fear that the previous government’s changes have made the UK a less attractive study destination,” he told the BBC.
Hillman added that some universities may face an “existential crisis” if they fail to adjust to this sudden drop in income.
The financial impact of the drop in international students is likely to be felt most acutely by smaller and less prestigious universities.
These smaller universities rely heavily on international student fees to subsidize their domestic programs.
Dr. Diana Beech, CEO of London Higher, said the larger universities with established reputations might weather the storm.
However, smaller institutions could face severe financial difficulty if they continue to struggle with recruitment.
She warned that “any further slowdown in international visas or other financial headwinds could have potentially significant economic costs.”
Calls for international student visa policy changes
Many university leaders call on the UK Government to reconsider its immigration policies.
There is growing pressure to reinstate policies that make the UK more attractive to international students.
Reintroducing the ability for students to bring family to the UK could be one of the policies that could be reinstated.
University administrators are also urging the government to retain the Graduate visa route.
The Graduate visa allows international students to stay in the UK for up to two years after completing their studies.
It has been a major draw for international students who want to gain work experience in the UK before returning to their home countries.
Recent changes in visa rules for UK international students
The decline in international Student visa applications is primarily attributed to stricter immigration rules introduced by the UK Government.
Immigration changes earlier this year have restricted most international students from bringing dependants to the UK.
Only postgraduate research or specific government-sponsored courses can bring family with them.
International students were also prohibited from switching to a work visa until they finished their course.
The UK Government is also implementing stricter compliance standards for international students.
Beginning in 2025, they must also meet a higher minimum income requirement when applying for a Student visa.
Recruitment agents and subagents must register and integrate quality checks from the Agent Quality Framework.
They can also lose their license if the overseas students they recruit fail UK visa checks, fail to enroll, or fail to finish their course.
While these measures were intended to curb overall immigration numbers, they have adversely impacted the higher education sector.
Mark Corbett of London Higher cautioned that these could lead to a loss of cultural exchange and weaken the talent pipeline for key industries.
The impact on universities will become clearer as universities finalize enrollment numbers in the coming months.
However, the current trend suggests that many universities face significant financial challenges.
Universities are now seeking ways to adapt, which may involve cutting costs, reducing staff, or finding alternative revenue sources.
Bringing down the UK’s net migration
Overall visa applications, including those of both workers and students, dropped by 36 percent compared to last year.
Only 582,000 requests were made in the first nine months of this year, down from 913,700 the previous year.
The Home Office attributes this decline to new immigration rules the previous Conservative Government implemented.
The changes include restrictions on bringing family members for foreign workers and students, raising the salary threshold for skilled workers, and reducing visa options for certain occupations.
The Office for National Statistics reported the UK’s net migration as 685,000 by the end of 2023, down from a record 764,000 in 2022.
UK’s Prime Minister Sir Keir Starmer has promised to lower these numbers but has yet to set a specific target.
The new Labour Government aims to reduce the country’s reliance on foreign workers and improve training for UK-based employees.
It has also conducted several enforcement crackdowns on businesses that violate visa rules and employ illegal workers.