UK: Report puts value of international higher ed commencements at £22.6 billion

Short on time? Here are the highlights:

  • New research from the UK provides a detailed analysis of the economic impact of international students in British higher education
  • The report estimates the total value of international higher education commencements at nearly £23 billion for 2015/16
  • After accounting for direct costs, the net value of that cohort of new students for 2015/16 is estimated at more than £20 billion

A newly released study makes clear the economic impact of foreign students in UK higher education, estimating that every ten non-EU students contribute a net impact of nearly £1 million (US$1.4 million) to the British economy.

This is one of the key findings from a new study undertaken by the London Economics consultancy: The costs and benefits of international students by parliamentary constituency. The report was jointly commissioned by the Higher Education Policy Institute (HEPI) and Kaplan International Pathways.

The headline-grabbing number in the study is the overall value of £22.6 billion (US$31.2 billion) attributed to foreign students in UK higher education. But this number measures only direct and indirect impacts of spending by newly arriving students for the 2015/16 academic year (and for visiting family members and friends).

As such, while the estimate reflects total spending for the entire duration of the students’ studies, it nevertheless still understates the total economic impact of foreign students in the UK. Most notably:

  • It counts spending only for the 231,000 higher education commencements in 2015/16. Total enrolment that year was closer to 438,000 and spending by continuing students is not captured in the report.
  • The analysis does not reflect spending by international students outside of the higher education sector.

Even so, the London Economics report will be a powerful lever in the unfolding immigration debate in the UK, and is particularly relevant to the question as to whether Britain should continue its controversial inclusion of international students within its net migration targets.

There has been a growing chorus of voices in recent months, both within the British government and otherwise, in favour of removing foreign students from the net migration counts.

Most recently, a special 11 January report from the House of Commons Home Affairs Committee has set out a strong call for evidence-based decision making with respect to immigration policy. Among its recommendations, the Home Affairs Committee calls for an immediate reversal of current policy, “International statistical rules require students to be included in the way migration is calculated but we do not believe that it is logical or in the best interests of the UK to include international students in a target based on restricting migration flow, given that they represent a large group of migrants who are in most part temporary and whom the Government is keen to encourage to come to the UK. There should be no national target to restrict the numbers of students coming to the UK. As a minimum, the Government should remove immediately student migration from the net migration target.”

Policy links

This link between the net economic contribution of visiting students and national policy is clearly not lost on the authors or sponsors of the London Economics report. In fact, it appears to be intended, at least in part, as a spur for the government’s own research into the impact of international students in the UK, the results of which are anticipated in September 2018.

“International students bring economic benefits to the UK that are worth ten times the costs of hosting them,” said HEPI Director Nick Hillman. “Trying to persuade the Home Office that international students nearly always benefit the UK can feel like banging one’s head against a brick wall. In the past, they have not accepted figures on the benefits on the grounds that they ignore the costs. Our work, in contrast, includes all the potential costs and conclusively proves these are small compared to the huge benefits…Given the detail that we are presenting, we also urge the [immigration advisory committee] to report earlier than the planned date of September 2018.”

“This research fills important gaps in our knowledge: while we knew that the benefits of hosting so many international students are large, we did not previously know how limited the costs are. Nor did we know how the benefits break down geographically across the UK,” adds Gavin Conlon, a partner with London Economics. “While our research focuses on economic impact, it would be wrong to imply that the benefits international students bring are only financial. In addition to their enormous economic impact, they also make our university campuses more diverse, resulting in educational and social benefits.”

To Mr Conlon’s first point, the study estimates the cost of hosting international students – including costs of instruction, support services, and “other public services [for] students and their dependants – at £19,000 per European Union student and £7,000 for students from outside the EU. “The net economic impact was estimated to be £68,000 for each typical EU-domiciled student in the 2015/16 cohort, and £95,000 generated by each typical non-EU-domiciled student,” notes the report. “In other words, every 15 EU students and every 11 non-EU students generate £1 million worth of net economic impact for the UK economy over the duration of their studies.”

In aggregate, London Economics estimates that the economic benefits of hosting international students are roughly 15 times greater than the associated costs. The total net impact of the 231,000 commencements in 2015/16 is estimated to be £20.3 billion (US$28 billion), with £4.0 billion of that total associated with EU students and the remaining £16.3 billion contributed by the non-EU students in the cohort.

“Compared to other countries, the UK is relatively outward looking,” concludes the report. “It will need to become even more so if it is to make a success of Brexit – and it has an incredibly strong higher education sector. Educating more people from other countries is one way to ensure both of these national characteristics continue to flourish in the future as in the past.”

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