Report: 80% of UK Universities at Risk of Deficit If International Student Enrollment Declines

Quality of education and student outcomes may be at risk due to financial difficulties in the UK higher education sector, a recent report has suggested.

According to findings from the Financial Sustainability of the UK Higher Education sector report by PwC and Universities UK, up to 80 percent of UK higher education institutions could face a deficit if the number of international students suddenly declines in the coming years, Erudera.com reports.

“Our report highlights that whilst the UK Higher Education sector is internationally recognised as being one of the best places to study in the world, over the past decade it has been facing increasing financial pressures, given that the fee cap for domestic students has been frozen since 2012,” the report states, pointing out the fee cap will remain frozen until 2024/25.

PwC’s analysis of institutions stresses that increased reliance on international fee income in the next few years would help providers with their finances.

25 percent of institutions experienced a deficit during the 2021/22 academic year. The report projects that international fees will account for 33 to 66 percent of total course fee income for 70 higher education providers in England and Northern Ireland by 2026/27.

It further explains that the sector has not evenly felt the pressures, but in times of uncertainty, some higher education institutions have delayed investment in physical and digital infrastructure to protect cashflow.

However, some institutions already have optimized operations to “drive their top-line and reduce their cost base” by adopting digital solutions, transforming back-office, rationalizing estates, and strengthening strategic cooperation.

The report notes these strategies are not enough to solve the financial challenges and that more radical solutions, including consolidation, must be needed for some providers, particularly smaller ones.

The United Kingdom is the second most popular study destination for students from around the world, hosting more than 700,000 international students in the 2022/23 academic year. In other words, international students account for 9 percent of the total student body in the country.

The majority of these students are from China or India. In the 2021/22 academic year, there were 100,000 Chinese and 87,000 Indian first-year enrollments.

Last summer, a former university director at Universities and Colleges Admissions Service (UCAS) said domestic students risk losing places at top UK universities, as the latter prefer international applicants who pay fees.