Cut courses to save money after immigration crackdown, universities told

Universities will have to cut courses to save money as an immigration crackdown has slashed overseas student applications, says the higher education regulator.

Home Office figures on Thursday showed universities have lost £1.5 billion in income after the previous government’s immigration crackdown slashed applications from overseas students by a sixth.

Visa applications by foreign students have fallen by 70,200, or 15.9 per cent since the Conservative government introduced restrictions in January this year barring them from bringing their dependents with them to the UK.

The Office for Students (OFS), the regulator, estimates that almost three-quarters of universities will face financial problems next year despite the Labour Government’s decision to increase tuition fees.

Sir David Behan, OFS chairman, said the chances of a university going bust “isn’t imminent now”, but to reduce the risk higher education needed to be “radically reimagined”.

He suggested universities should think about “a transformation of their offer”, potentially cutting the length and range of courses.

He said they should also consider increasing degree apprenticeships where tuition fees are covered mainly through the levy on larger employers. Apprentices are paid to work while studying, so students have less debt.

He said universities also needed to collaborate more and should consider mergers or whether courses at nearby institutions were too similar. He said it “doesn’t make sense” for those universities to compete with one another.

However, as universities reduced the number of courses on offer, he said he did not want to see “cold spots” where students in more rural locations did not have a choice of courses at their nearest university.

Tuition fees in England will rise for current and existing students by £285 to £9,535 a year for those on full-time degrees, in autumn 2025 but the OFS still expects 40 per cent of universities to be in financial deficit in 2023/24.

By 2025-26, 72 per cent could be spending more money than they have coming in and may have to use an overdraft or financial reserves, with a total £1.6bn deficit forecast across the sector.

This £1.6 billion mirrors the £1.5 billion lost from the fall in foreign students who account for a fifth of universities’ overall income. They effectively cross-subsidise losses on teaching UK undergraduates and provide revenue for research. An overseas student, on average, brings in £22,000 per head.

The Home Office data showed that the number of overseas students’ applications fell from 442,900 in the year to November 2023 to 372,700 in the year to November 2024.

It means that the Government is set to miss its target of 600,000 overseas students in a year for the first time since Boris Johnson introduced it as part of his international education strategy. Foreign students are estimated to generate nearly £40 billion for the UK economy.

The number of dependents of students seeking visas fell even more dramatically, from 137,400 in the 11 months to November 2023 to just 20,400, a drop of 85.2 per cent.

Overall, visa applications for workers and students are down 39.4 per cent since 2023, with 635,300 seeking to come to the UK in the first eleven months, compared to 1,048,600 in the previous year. This was driven by a 29 per cent fall decrease in main applicants and a 57.1 per cent fall in dependents.

The figures suggest immigration is on course to fall by 300,000 following measures including bans on foreign workers and students bringing dependents, increases in the skilled worker salary threshold from £26,200 to £38,700, and curbing shortage occupation visa schemes.

Data released by the Office for National Statistics (ONS) two weeks ago showed that net migration peaked at a record 906,000 in the year ending June 2023, before falling by 20 per cent to 728,000 in the year ending June 2024.

Sir Keir Starmer has pledged to retain nearly all the Tories’ measures as part of his efforts to reduce the UK’s reliance on foreign workers.