Choppy waters ahead for international student demand

Demand for places at United Kingdom universities will be hit by the impact of Brexit and other global changes – including a pledge by the Home Office to consult on making it harder for international students to come to the UK. But could the blows be softened by the Trump effect in the United States?

Two new pieces of analysis released last week offer some interesting insight. The first is research published by the Higher Education Policy Institute or HEPI and Kaplan International Pathways.

It claims to be the first detailed modelling of what Brexit and global changes could mean for international recruitment of students in the UK. Undertaken by London Economics, the analysis, “The Determinants of International Demand for UK Higher Education”, says some expected factors, such as higher fees for European Union students, would reduce demand and others, such as depreciation of sterling, would raise it.

Taken together, the changes could reduce the total number of overseas students, to the detriment of universities and their surrounding communities. But at the same time they could increase tuition fee income by £187 million (US$228 million) (net) in the first year alone as fees for students from EU countries would rise.

Nick Hillman, director of the Higher Education Policy Institute, said: “British universities are in choppy waters and this research shows the options ahead. Policy-makers can either push our higher education institutions towards the icebergs or help them reach the relative safety of the open seas.

“Were the Home Office to conduct yet another crackdown on international students, then the UK could lose out on £2 billion a year just when we need to show we are open for business like never before. Removing international students from the net migration target would be an easy, costless and swift way to signal a change in direction.”

Meanwhile, in other analysis, Dr Rahul Choudaha, co-founder of DrEducation, a US-based consultancy, says with Brexit the post graduation employment and immigration opportunities will become more restricted. “It will likely hurt the enrolment for the masters programmes for non-EU international students and undergraduate programmes for EU students.”

Making inferences from comparative analysis of recent student mobility data from HESA in the UK and the Institute of International Education in the US, Choudaha said despite the high quality and reliable reputation of the British higher education system, unwelcoming immigration policies are also very likely to hurt the attractiveness of the UK as a study abroad destination.

The HEPI-Kaplan research actually found that a 10% depreciation of sterling could increase enrolments from all other countries by around 20,000 students – an increase of 9% – in the first year, worth £227 million (US$276 million) in fee income.

Conversely, harmonising the rules for EU and non-EU students would cut enrolments from other EU countries by more than 31,000 students (a 57% decline in EU students) – amounting to a net loss of £40 million in the first year (after accounting for higher fees from those who still study in the UK).

The oldest UK universities would have the most to gain financially, with Oxford and Cambridge universities standing to receive more than £10 million more in fee income each year on average, while less prestigious universities stand to lose modest amounts of income (around £100,000 on average).

The modelling additionally shows that the removal of post-study work visas may have led to a reduction of around 20% in undergraduate enrolments by overseas students but an increase of 7% in postgraduate enrolments between 2012 and 2014.

It also indicates that an increase in the energy price index could increase undergraduate enrolments from countries that are large oil producers by almost 4% but produce a fall of 1% in students from other countries; and that a 1% increase in gross domestic product per capita internationally could produce an increase of 0.5% in the number of international undergraduate enrolments in the UK.

The research says that the Home Office commitment to consult on introducing further restrictions on student immigration puts all the positive effects of current global changes at risk while doing nothing to ease the negative effects.

“If the extra 20,000 students a year who are expected to come to the UK as a result of the depreciation of sterling were not allowed to come, then they could not (partially) offset the lost EU students.” The total loss to the UK economy could amount to almost £2 billion (US$2.4 billion) a year in steady state, made up from:

• • £463 million a year less in tuition fees for higher education institutions;
  
• • £604 million a year less in non-tuition fee spending;
  
• • £928 million a year less from the detrimental impact on universities’ supply chains.

This loss would be additional to the billions of pounds that would be at risk from any big cut in the number of international visas for students, the researchers say.

Difficult to forecast

Linda Cowan, managing director (UK) of Kaplan International Pathways, said post-Brexit, changes around the status of EU students in the UK, and ongoing talk of further international student regulations make forecasting student numbers and revenues more difficult than ever for universities.

“Compounding these challenges is the uncertainty this creates for international students, increasing the likelihood of students choosing to study in other countries, resulting in a significant loss for our universities and the communities they enrich.”

Gavan Conlon and Maike Halterbeck, authors of the report from London Economics, said that in a period of significant economic uncertainty, there are substantial export opportunities available to UK higher education institutions. However, these opportunities can only be seized if universities are allowed to deliver them.

“With an economic value of £2 billion per annum, there is ample reason to allow more international students to come and study in the UK, thereby boosting UK prosperity, as well as maintaining the UK’s global reach and influence.”

However, the HEPI-Kaplan report authors warned that their analysis is based on historic information and does not take into account the change in sentiment that might be felt towards the United Kingdom following the Brexit referendum – or other political events such as the US election.

They also warned that the general attractiveness of the sector – especially for postgraduate students – might be adversely affected by the fact that UK higher education institutions are expected to find it increasingly challenging to retain high-calibre research staff and related research funding in a less benign environment.

Competitive environment

Choudaha said a key problem for UK universities is that the two top source countries for international students, China and India, are not driving up enrolment growth. They account for more than one in three international students but for four years now enrolment from China has grown at a much slower pace in the UK than the US, while recruitment from India has been in consistent decline.

The UK faces stiff competition for Indian students against the US, which has experienced a dramatic increase in the number of Indian students, primarily in engineering and computer science fields, Choudaha said.

But the true beneficiaries of uncertainty caused by Brexit and expected further restrictions on student immigration may not be the US but other destination countries.

“British universities rely heavily on international students for meeting enrolment goals. The competing destinations like Australia and Canada with more welcoming immigration policies may benefit from this turbulence,” Choudaha said.

This is because US universities are also facing a tougher environment for attracting international students for fall 2017.

The global market for international students is competitive, Choudaha says, with three of the four top source countries, China, South Korea and Saudi Arabia, witnessing slower growth rates and India affected by the recent demonetisation of its currency.

“In a globally competitive market of international student recruitment, the outcome of the American presidential election seems like a saving grace for the UK universities,” Choudaha said.

“To some extent, the unfavourable perception of Brexit among international students has been ‘trumped’ by the uncertainty of the American immigration policies and its implications on work opportunities.”