The government’s proposed levy on international student fees could cost universities in England more than £600m a year if it goes ahead, a study has found.
The 6% surcharge on tuition fees paid by overseas students, floated in the Home Office’s recent immigration white paper, would particularly hit leading universities such as University College London (UCL) and the University of Manchester, based on the figures compiled by the Higher Education Policy Institute (Hepi).
The policy would leave universities in a difficult decision over whether to pass on the cost of the levy to students or absorb some or all of it from the fees they charged, in effect cutting their income.
Nick Hillman, Hepi’s director, said: “The proposed levy on international students comes up in just about every meeting I attend. University leaders are worried it will be yet another weight dragging them down in the struggle to remain globally competitive.”
Based on annual fees from non-UK students totalling £10.3bn, the levy would bring in £621m. UCL would contribute £43m, Manchester £27m, Imperial College London £22m and the University of Oxford £17m.
The levy will also hit universities that raise a high proportion of funds from international students, including the University of Hertfordshire and the University of the Arts London.
The government has said the money raised by the levy would be used to fund “the higher education and skills system”, with further details to come in the autumn budget.
While vice-chancellors are hoping the bulk of the funds will be re-invested in higher education, Hillman said it can’t be taken for granted.
“The levy is designed to raise more money for the government’s educational priorities but it is not clear if all the money will come back out of the Treasury, nor how it will be spent if it does,” he said.
“Threatening an expensive new tax on one of the country’s most successful sectors with only a rough idea of how the money will be used seems far from ideal. Currently, the levy is a shadow looming large over universities as they prepare for the next academic year.”
The Home Office estimated the levy would initially lower student numbers by 14,000 a year, although universities say that is likely to be an underestimate.
Many universities have already seen lower income from international students following recent visa restrictions.
Vivienne Stern, the chief executive of Universities UK, which represents vice-chancellors, said: “We would urge government to think carefully about the impact that a levy on international student fees will have on universities and the attractiveness of the UK as a study destination.”