The decline in overseas student numbers is a pressing issue for Scotland's economy, with far-reaching implications that extend beyond the realm of education. The latest report reveals a staggering economic impact, highlighting the importance of international students to the nation's financial health. The findings underscore the need for a comprehensive strategy to address the challenges posed by this trend.
The report, produced by the Higher Education Policy Institute (HEPI) and Kaplan International Pathways, sheds light on the economic benefits and costs associated with international students in the UK. It reveals that the 404,500 international students who commenced UK higher education courses in 2024/25 will generate a substantial economic benefit of £45.1 billion over the course of their studies. However, the public purse will bear a significant cost of £4.7 billion, resulting in a remarkable benefit-to-cost ratio of 9.7 to 1.
The analysis takes into account the average net contribution of each student, and if the 2022/23 numbers had been sustained in 2024/25, the net impact would have been approximately £2.9 billion higher. In the 2024-25 academic year, 36,300 international first-year students in Scotland contributed a net economic benefit of £2.93 billion. The report further estimates an average economic benefit of between £410 and £480 per resident, with an overall contribution of £51 million to Scotland's economy.
The impact is particularly significant in constituencies with a higher concentration of international students. For instance, Glasgow North, with 6,150 students, contributed a net £467 million to the economy. This ratio of around one international student for every 60 residents highlights the substantial economic impact of these students.
However, the report also underscores the challenges posed by the decline in international student numbers. Scotland has witnessed a fall of 4,645 international students, contributing to a challenging financial climate for further and higher education. The report attributes this decline to various factors, including the impact of Britain's decision to leave the European Union, which previously allowed EU students to attend Scottish universities without paying fees.
The number of EU students has decreased by 59% in the UK since 2020/21, with approximately 93% of international first-year students in 2024/25 domiciled outside the EU. India, China, and Pakistan are the largest sources of foreign students, while most EU students come from Ireland, France, and Germany. The report's breakdown by parliamentary constituency reveals a wide range of economic impacts, with some constituencies benefiting from under £1 million, while others with fewer than 10 international students.
The economic impact of international students extends beyond tuition fees. They contribute directly to the education system through fees and indirectly through non-fee expenditure, as well as the spending of friends and relatives who visit. The report emphasizes the need for a positive and welcoming environment to attract international students, especially in a competitive global market.
Linda Cowan, Managing Director at Kaplan International Pathways, underscores the importance of a welcoming environment, stating, 'In an increasingly competitive international market, a positive and welcoming environment is essential if the UK is to remain a leader.' Rose Stephenson, director of policy and strategy at HEPI, adds, 'Immigration is a top concern for voters in Britain, and the debate around immigration policy should be informed by evidence.'
The report's findings have significant implications for the UK's economic growth ambitions. Maike Halterbeck, partner at London Economics, warns, 'The number of international first-year students coming to the UK has already decreased by around 54,500 since 2022/23, and this trend is expected to continue.' The potential new international student fee levy is cited as a key factor in this decline.
In conclusion, the decline in overseas student numbers poses a significant challenge to Scotland's economy and the UK's higher education sector. The report's findings highlight the need for a comprehensive strategy to address this issue, ensuring a stable and competitive policy environment that attracts international students and supports the nation's economic growth.
