International students in UK generate huge economic gains – study

Research shows 10 students arriving from outside EU will generate £1m of net economic impact during studies

One year’s intake of international students at British universities generates economic activity worth £390 for each person in the UK each year, rising to more than £700 for every inhabitant of London, according to a study published today.

Overall, 272,000 students from outside the UK who began university courses in 2018-19 would generate close to £26bn in net economic activity once the costs of teaching support and their use of public services had been accounted for.

That means just 10 international students arriving from outside the EU will generate £1m of net economic impact during their studies.

The figures come from an analysis of the income to the UK economy from tuition fees and other spending by each cohort of international students, including those from the EU, and the subsequent multiplier effect on the economy in terms of jobs created and further spending.

The research, published by the Higher Education Policy Institute (Hepi) and Universities UK International (UUKI), showed the benefits from international students spread across the UK.

Constituencies that are home to universities are likely to see their local economy stimulated by the extra spending: the report estimates that Sheffield Central benefits from nearly 3,000 students to the tune of £290m, and Nottingham South by £261m for each year’s worth of students.

Vivienne Stern, the director of UUKI, said: “While there has been a growing realisation of the tremendous social and cultural benefits of international students, this study provides a stark reminder of their financial importance to communities across the UK, economic recovery and the levelling-up agenda.”

The figures show that the economic benefits generated by international students far outweigh the costs to public services such as healthcare. Including teaching grants from central government as well as net NHS spending and other social expenditure such as police and education, the costs amount to just £2.9bn.

The figures compiled by London Economics don’t account for opportunity costs, and exclude any longer-term benefits such as investment, business and trade links.

The £26bn net total is 19% higher in real terms than similar analysis using figures from 2015-16, mainly driven by the increase in international student numbers. In 2015-16, 174,000 international students from outside the EU undertook their first year of study in the UK, and by 2018-19 the figure had risen to nearly 208,000.

The study showed that approximately £4.7bn worth of net impact originated with EU students, while the remaining £21.3bn was generated by students from outside the EU. However, those figures are from when EU students were still eligible for domestic fees and student loans.

Since the completion of Brexit, EU-domiciled students have been charged the same higher tuition fees as international students. This year there has been a more than 50% slump in the numbers of EU students accepting places on undergraduate courses in the UK, from 22,000 in 2020 to 9,800 in 2021.

Nick Hillman, the director of Hepi, said the results confirmed that higher education was one of the UK’s leading export earners. “We need to provide a warm welcome, ensure our educational offer remains competitive and help international students secure fulfilling careers after study.

“The policy environment is, in many respects, more conducive than it was, with the government gradually becoming more positive about international students. But the current halving in the number of EU students confirms future success cannot be taken for granted,” Hillman said.

Contributor

Richard Adams Education editor

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