Since 1994 the total number of overseas students in UK universities has quadrupled. Currently there are 266,000 full-time overseas students studying in the UK. This is excluding the 110,000 students from the remainder of the EU who are counted as Home students for student financing purposes.
The postgraduate sector has seen the strongest growth in overseas students in terms of proportions and absolute numbers. There are now over five times as many overseas taught postgraduates than there were in 1994, increasing from 28,000 then to 140,000 by 20011/12 (Figure 1). They now represent 48% of masters students, and when including non-UK EU students this raises to 60%.
Its easy to see why universities like to recruit overseas students. Their fees are typically higher than domestic students (particularly for undergraduates whose fees are capped in the UK) so they can considerably boost funding at a university. The fees from overseas students now contribute 11.6% of the total income of the higher educational sector. Moreover their higher tuition fees make up 39% of all fee income despite only accounting for 15% of all student places.
A critical policy question therefore is, what impact has this rapid influx of international students had on the number of places available for domestic UK students? Have universities taken on overseas students at the expense of domestic students, or have they used this increased funding to expand the number of places available for domestic UK students?
Until recently, talented people born in one country were educated, worked, retired and died in that same country. For that country, financing higher education, through tuition fees paid by families, foundations or financial institutions providing loans, or through taxes, was an investment generating extra welfare for the local population: larger graduate income meant extra tax revenues, better wealth, improved productivity of both high and low skilled people. These positive externalities justified and even guided an efficient and fair sharing of the cost of studies between tuition fees and tax financed subsidies. That was the old paradigm.
Nowadays the story is different. Talented students are international. Cross border spillovers are at work: the country which hosts them for higher education is neither their place of birth and first education, nor of work after graduation. And the jurisdiction which finances the studies is no longer that which benefits from the enrichment of that human capital. Even more, studying abroad is a driver for subsequently working abroad.
Last year an article in the Guardian newspaper described significant disparities in the success rates of white and non-white applicants to the University of Oxford, even among students who received top grades at A-level. The article reported that, in 2010-11, offer rates were around 1.5 times higher for white applicants than for ethnic minority applicants with the same grades, and up to twice as high in relation to Oxford’s two most oversubscribed subjects, Medicine, and Economics and Management. This pattern was found to hold even for students with 3+ A* grades at A-level. Continue reading →
The raising of the cap on tuition fees charged by English universities to £9,000 per year in 2012 (and the accompanying increase in student loans) means that students are now leaving university with considerably more debt than they did under the previous system. Most mid-to-higher earning graduates are also repaying substantially more. A recent report published by the Institute for Fiscal Studies (IFS) estimates that students will leave university with around £20,000 more debt under the new system compared to the old system, with graduates in the top half of the earnings distribution paying back between £8,000 and £22,000 more in today’s money than they did before.
But despite these huge increases in private contributions, it does not currently look like the government will save much money as a result of the reforms. Continue reading →
A recent report by the much respected Higher Education Policy Institute (HEPI) recommends that UK policymakers pay much closer attention to Australia’s ‘advanced’ university funding system, which shares many of the features of the UK system, but at considerably lower taxpayer expense.
It is easy to see why HE finance policymakers should be tempted to look at Australia for inspiration. The recent finding that the RAB charge – or the proportion of unpaid student loan debt, that is covered by the taxpayer – may reach 45% shocked many. An IFS report out on Thursday put the figure at 43.3%. This means for every £1 lent to students 45p is not recovered. By contrast, the Australian equivalent – at 25% for standard tuition fee loans – is a much healthier figure.
On the surface, this would seem reason enough to adopt the features of the Australian tuition fee system. But this could result in unintended consequences if not thought through thoroughly. Continue reading →