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British universities stand to lose tuition income if students from European Union countries are required to pay higher fees in line with those paid by students from outside Europe, according to a new analysis released by the Higher Education Policy Institute, a U.K.-based think tank, and Kaplan International Pathways, an international student recruiting and services company. But those losses could potentially be offset by gains in students attributable to a weaker pound sterling.
A financial modeling report finds that fee harmonization and the elimination of loan subsidies for E.U. students under the terms of a Brexit could lead to a 57 percent reduction in E.U. students, resulting in a total net loss of 40 million pounds (about $48 million) in the first year. The report forecasts that the most prestigious universities stand to benefit financially from charging higher fees to E.U. students, while the majority of institutions will see losses.
At the same time, the analysis finds that a 10 percent depreciation of the pound sterling -- the value of which has fallen since the British vote in favor of exiting the European Union -- could lead to a 9 percent increase in international enrollments in the first year, an increase that equates to £227 million (about $274 million) in fee income.
"In aggregate, the combined effect of the currency depreciation (+£227 million), and the removal of E.U. undergraduate fee support and fee harmonization (-£40 million) was potentially positive -- amounting to £187 million [about $225 million] in students’ first year of study -- though there would be significant variation across institutions," the report states.
The analysis assumes that there are no caps on the number of international students or differential treatment of student visa holders according to the institution they attend -- the latter an idea proposed by the U.K. government as part of its push to drive down net immigration numbers. "The positive impact of the 10 percent depreciation of sterling assumes that an additional 20,000 students will be allowed to study in the United Kingdom," the report states. "However, given the current political environment, if it were decided that institutions could not benefit from this increased demand because of an international student number cap or as a result of tougher rules facing some institutions, then the £227 million potential gain that might be achieved by U.K. higher education institutions may not be realized or only realized in part."
