How the UK profits from international students
(Last updated: 13 May 2021)
The Higher Education Policy Institute (HEPI) has just published a detailed study into the benefits and costs of the UK’s increasing international student population. The headline? International students make such a dramatic net contribution to the UK economy that every single UK resident is £310 a year better off than we’d be if these students decided to pursue their studies elsewhere.
What’s remarkable about these new figures?
We’ve reported before that international students are net contributors to the UK economy, and this is common knowledge among educators. Nevertheless, the sheer scale of the net contribution of international students to our economy – and hence the importance of this population to the health both of our Higher Education institutions and the wider economy – is quite startling.
The report goes into scrupulous detail to analyse not only the gross contribution of international students to the UK but also the costs to the public of sustaining them while they’re in the country. It analysed the estimated costs and benefits of the international student cohort starting in 2015-16 throughout the duration of their studies in the UK.
Some impressive figures emerge from the report:
- Each non-EU student places a cost burden of just £7000 on the public purse, while contributing an average of £95,000 to the UK economy. In case you’re wondering what the multiplier is here, the report spells it out: “The benefit of hosting non-EU HE students is 14.8 times greater than the total cost.” That’s quite a profit margin!
- This astronomical benefit to cost ration means that it takes the admission of just eleven non-EU students to contribute £1 million to the UK economy.
- EU students don’t have quite such a dramatic impact on the public purse, but their net contributions are still around £68,000 per head.
- The report estimates the total net benefit of the international student cohort starting in 2015-16 to be £20.3 billion.
Remember – because it does bear repeating – that all the above figures are net contributions, calculated after any costs to the UK of hosting these students have been taken into account and deducted from their gross contributions. And remember also that these figures represent the net impact on the UK economy of just one single cohort of international students. These figures can therefore be taken very roughly as a per annum estimate of the net impact of international students on the UK economy, though with the caveat that the figure depends on international student numbers continuing to hold up.
How the benefits are distributed
As you might expect given London’s international reputation, the city itself and the South-East have the largest international student populations and are the greatest net beneficiaries, with international students generating a net £4.64 billion for London and £2.44 billion for the South East. But there are significant beneficiaries elsewhere too: the West Midlands, Scotland, the North West, and Yorkshire and the Humber all admitted in excess of 15,000 international students in 2015-16, and these regions each received a cash injection of between £1.5 billion and £2 billion. And the single parliamentary constituency to benefit most wasn’t in the South-East at all, but Sheffield Central, whose net gain of £226 million dwarfed the average for UK parliamentary constituencies of £31 million. In fact, of the top eight constituencies by net financial benefit, no fewer than five were in the north of England, and two of the three southern constituencies covered Oxford and Cambridge.
And in case you’re worried that some regions are shouldering the cost of maintaining international students while other regions benefit, rest assured that all regions of the UK are net beneficiaries from the presence of international students, with all UK mainland regions receiving a net benefit of £0.9 billion or more. Northern Ireland lags a long way behind but even this region saw a (relatively) modest net benefit of £170 million.
What’s the significance of these figures, and how are they likely to impact policy?
These figures demonstrate, clearly and unambiguously, the net benefit of international students to the UK economy. Despite this, it has often been politically expedient to target international students as “migrants” who are taking from the public purse rather than putting into it, and the government has progressively restricted the rights of non-EU international students as part of a broader “tough-on-immigration” stance. Remarkably, these restrictions appear to have had little impact on non-EU student numbers, though there are concerns that any new restrictions placed on EU students after Brexit – and even the threat of such restrictions – may be contributing to falling international student numbers from the EU.
This study is a bit different from others that have gone before it, however, in that it directly addresses a complaint that has been used to discredit previous arguments that international students benefit the economy. HEPI Director Nick Hillman explains:
"Trying to persuade the Home Office that international students nearly always benefit the UK can feel like banging one’s head against a brick wall. In the past, they have not accepted figures on the benefits on the grounds that they ignore the costs. Our work, in contrast, includes all the potential costs and conclusively proves these are small compared to the huge benefits."
By showing clearly the extent to which international students benefit the UK economy even once costs are taken into account – and to which these benefits are distributed across the country – this study demonstrates the economic importance of retaining and expanding our international student intake, regardless of the direction of current political tides.