UK plans to impose 6% international student tax, cut stay after graduation

The levy, introduced in the government’s immigration White Paper on Monday, aims to raise funds for domestic higher education and skills development. It could cost English universities an estimated £620 million (US$823 million) annually, based on data from the Higher Education Statistics Agency (HESA).

The government said the 6% charge would be applied to the £12 billion annual fee income universities generate from international students, with revenue reinvested into the "higher education and skills system" to help train domestic workers and reduce reliance on foreign labor.

In a statement accompanying the White Paper, the Home Office said, "Illustratively, a 6% levy on Higher Education tuition would represent an increase in the cost of coming to study in the U.K. if passed on by providers to students as increased tuition fees."

"The impact on individuals' willingness to apply for a student visa and undertake a Higher Education course in the U.K. is uncertain. Provisional analysis suggests that student visa demand could fall by up to 7,000 main applicants to 14,000 per year in steady state, with a 6% levy," the statement added.

Tim Bradshaw, chief executive of the Russell Group, described the levy as a "serious concern" for institutions already facing financial challenges.

"It seems the levy is only intended for England, so this sets up a further divergence in Higher Education rules and funding levels across the U.K. that will need careful analysis," he told The Pie News.

According to an analysis by Times Higher Education (THE) using 2023-24 HESA data, institutions with large international student populations, such as University College London, could face annual bills of up to £41.5 million, while the University of Manchester may owe £27.3 million. If applied in Scotland, the University of Edinburgh could face a bill of £23.3 million.

Gavan Conlon, co-head of education and labor market teams at consultancy firm London Economics, told THE that the highly competitive market means some universities will suffer financially.

"Those institutions facing greater competition may be forced to keep tuition fees at the same level and absorb the levy, or be forced to pass the levy on to students and reduce international recruitment," Conlon said. He added that the levy comes as around 40% of universities already run deficits and face increased tax burdens, rising National Insurance contributions, and tighter immigration regulations.

"Higher education institutions need certainty in a time of significant financial instability, but the immigration White Paper has only added to the uncertainty experienced by the higher education sector in recent years," Conlon said.

The White Paper also proposed reducing the length of the Graduate Route visa, which allows international graduates to remain in the U.K. after completing their studies, from two years to 18 months. Graduates must secure graduate-level employment to remain after that period.

Critics argue that these measures reinforce perceptions that international students are unwelcome, risking damage to one of the U.K.'s most successful export sectors, which contributes billions to the national economy.

Higher Education Policy Institute (HEPI) director Nick Hillman called the proposed levy "deeply controversial."

"A levy will be seen by many as a tax on a very successful U.K. export sector," he told The Pie News.

Vivienne Stern, chief executive of Universities U.K., urged the government to "think carefully" about the levy's impact on institutions already navigating a difficult financial environment, as well as on the U.K.’s attractiveness to international students.

"Universities know they need to be more efficient and are driving the reform agenda. We need government to get serious about working with the sector to address the financial sustainability of universities," she was quoted in a Universities U.K. media release. Stern also called for increased per-student funding and stabilization of international demand.

Regarding the shortened Graduate Route visa, insiders expressed concern that it could also dampen international students' interest in studying in the U.K.

HEPI director Hillman told The Pie News that reducing the Graduate Route was "admittedly not as bad" as eliminating it, a step the government previously considered amid concerns it could be misused primarily as an immigration route rather than for educational purposes.

However, Hillman noted employers wanted the Graduate Route extended to three or four years, as opposed to the planned reduction, "as new employees take months to become productive members of the workforce."

Diana Beech, director of the Finsbury Institute at City St George's, University of London, described the proposed visa reduction as a "shock to many in the sector."

"In short, while the White Paper ends speculation about the U.K.’s offer to future international students, it opens up a whole host of new questions for the higher education sector – especially around the evolving role and purpose of universities," she wrote in THE.

International student enrollments in the U.K. fell 7% in 2023–2024, with postgraduate numbers from non-EU countries dropping 10%, according to HESA. The sharpest declines came from Nigeria (-36%), India (-15%), and China (-4%), ICEF Monitor reported.

Insiders attribute the drop to the U.K. government's dependent ban, effective from January 2024, which prevents master's students from bringing family members, a restriction previously limited to undergraduates.

In 2023, the government reviewed the Graduate Route visa, confirming post-study work rights would continue, but signaled tighter student visa rules and stricter oversight of recruitment agents to prevent misuse. Proposed measures include raising financial maintenance thresholds, standardizing English proficiency tests, tightening institutional compliance, and prioritizing face-to-face learning over remote study.