A third of UK universities saw a decline in overseas non-EU applicants in 2023, almost twice as many as the previous year, according to a Financial Times analysis of data from the university admissions service.
The cooling of international demand for a swath of British higher education institutions came as overall non-EU applications grew 3.6 per cent to 518,865, the slowest rate in six years and a sharp decline from 11.6 per cent in 2022.
The Universities and Colleges Admissions Service data, covering about 60 per cent of non-EU overseas entrants, raises further concerns about the financial health of a sector that has become reliant on international income.
The data from UCAS published on Thursday followed warnings from university leaders that a drop-off in applications from lucrative overseas students would plunge large numbers of higher education institutions into financial deficit.
UK universities rely on income from international students to subsidise domestic students on whom they on average make a loss of £2,500 a year, the Russell Group of top universities has estimated.
Fees for domestic students are capped at £9,250 and have been effectively frozen for a decade despite inflation.
Vivienne Stern, the chief executive of Universities UK, warned that hostile government rhetoric towards international students had contributed to the drop-off in numbers.
Prime Minister Rishi Sunak has made reducing net migration a chief goal of his government. He has removed the right of masters students to bring family members to the UK and is reviewing the graduate visa route, which allowed overseas students to stay and work for at least two years after graduation.
“We understand the pressure on public finances, but my message would be: ‘if you can’t help us, at least stop making things worse’,” said Stern.
The FT’s analysis of the UCAS data looked at applications to 151 universities, excluding the smallest institutions where the numbers are more volatile and those that did not have non-EU overseas applicants in the past two years.
The recent signs that international student demand is softening has the potential to up-end the sector’s expectation that overseas income would in future play a bigger role in shoring up the finances of British universities.
A 2023 financial sustainability report for English universities by the Office for Students, the sector regulator, estimated that tuition fees from non-EU overseas students would account for 24 per cent of income by 2025-26, up from 19 per cent currently.
Some universities have lowered their entry standards for lucrative international students in response to funding pressures, including University of York, the FT reported last week.
Rachel Hewitt, the head of MillionPlus, which represents former vocational colleges and polytechnics that became universities in 1992, said the signs of slowing international demand were a source of concern in the sector.
“In a globally competitive market, if international students do not feel welcome in the UK, they will vote with their feet and choose other destinations for study,” she said.
The UCAS data covers undergraduate applications up until the June 2023 deadline for the current academic year. The slowdown in international student enrolments may be steeper than the data suggests as a higher percentage of non-EU students than usual have been failing to take up places even after paying their deposits, university leaders told the FT.
Data released this month by Enroly, a web platform used by one in three international students for managing university enrolment, showed deposit payments were down 37 per cent compared with last year.
Jeffrey Williams, Enroly chief executive, said its recent data was for postgraduate students who apply later in the year than undergraduates, capturing a more recent trend in university admissions.
India, other Asian countries such as Bangladesh, and Nigeria have seen the sharpest falls, according to Enroly, meaning some universities have a greater exposure than others.
In 2021-22, students from India, Nigeria and Bangladesh made up more than 10 per cent of the student body at about one-sixth of UK universities, according to data from the Higher Education Statistics Agency.
Ian Dunn, provost at Coventry University, said financial pressures in the sector had been growing over “quite some time”, adding that Sunak’s ban on postgraduates bringing their families had “sent a shiver through the market”.
Coventry University gets approximately 42 per cent of its income from overseas students compared with a sector average of about 20 per cent. The university said in December it will cut spending by nearly £100mn over the next two years.
As the financial climate tightens, university bosses have called on the government to increase domestic tuition fees and teaching grants.
Tim Bradshaw, Russell Group chief executive, said that while the number of international students placed at top-tier universities has remained steady over the past year, numbers were likely to slow in coming years, leaving the sector “vulnerable to shocks”.
“That is why we need a joined-up approach from the government to support the financial resilience of the sector,” he said.
The Department for Education said it was “striking the right balance” between reducing net migration and attracting the brightest students to UK universities.
“We are continuing to closely monitor the financial health of the sector and provide any necessary support to ensure students are protected,” a spokesperson added.