Commenting on reports that the government may limit the number of foreign students coming to the UK, author of the IEA paper Setting Universities Free, Peter Ainsworth said:

“The government’s behaviour towards higher education is contradictory. On the one hand it says that universities are one of the country’s great strengths and, on the other, it caps tuition fees while inflation is high, thus starving them of income. Then, when the institutions try to survive by recruiting more international students, the government indicates it will make that harder. 

“Understandably, there is no money in the kitty to splash out on the sector but there is a Conservative alternative – set them free to decide tuition fees but make them earn the money directly from home students by issuing loans that do not carry a taxpayer subsidy. 

“Minister for Higher Education Robert Halfon, in his first speech in the post, said that getting graduates good jobs is a key objective, but he put forward no proposals to achieve this. 

“Incentivising universities to provide courses which result in graduating students obtaining lucrative employment is the way forward, benefitting the student, the university and the taxpayer while making it possible to reduce immigration.”

Key points:

• Tuition fees for domestic undergraduates have been frozen at £9,250 – the 2017 level – until 2024/25.


• Given that inflation erodes the value of the fee each year, universities could be losing £4,000 per student by 2024/25.


• Universities have responded by recruiting more international students where fee levels are not capped.


•  As international students, and any family members that come to the UK with them, are treated as immigrants, this has contributed to high levels of net migration.


• The government, keen to reduce immigration, is now floating the idea of preventing some universities from recruiting international students, or at least making it more difficult.


• This could force some universities into bankruptcy.


• The government should allow universities to charge enough from home students to make their teaching viable while limiting the cost to the taxpayer.


• Immigration can then be reduced without putting the sector at risk.


• This can easily be done by copying the approach for postgraduate education – where universities are free to set any fee level, but the government loan is fixed.


• To ensure that applicants from all backgrounds have access, the universities would be obliged to offer their own loans to students, so that they have a real incentive to ensure that graduates enter worthwhile employment and so repay the loan.


• If this approach is adopted and the government loan freeze extended beyond 2024/25 the government could save £60 bn and more – making tax cuts or other spending possible.

ENDS 

Notes to editors

Contact: media@iea.org.uk / 07763 365520

IEA spokespeople are available for interview and further comment.

‘Setting Universities Free: How to deliver a sustainable student funding system’ is available to read here: https://iea.org.uk/wp-content/uploads/2022/10/Setting-universities-free.pdf

The mission of the Institute of Economic Affairs is to improve understanding of the fundamental institutions of a free society by analysing and expounding the role of markets in solving economic and social problems. The IEA is a registered educational charity and independent of all political parties.