Why did universities become so dependent on international students?
In a great many universities, international fee income is described as a cushion — a commercial success, a useful extra, something at the edge of the institution that softens a difficult year.
It is not at the edge. It is load-bearing. Government controls the price of most home undergraduate teaching while the cost of delivering it rises; research funders routinely do not meet the full cost of the work they fund. The surplus from uncapped international fees is what closes both gaps, and once it has closed them it has already become posts, repairs, library provision, student support and research time.
This chapter takes apart the reassuring stories that grew around that arrangement — the cushion, the margin, the volume, the diversification, the offshore campus — and asks the question a sane governing body would ask before betting the budget on any of them.
In many universities, international fee income is not a cushion. It is part of the structure. Remove it and the issue is not that the room becomes less comfortable. The wall moves.
Regulated to Fail, Chapter 3
Move the dial
One column of the sector's accounts covers the losses on the others. Drag international recruitment and watch what happens to the rest.
-50%no change+20%
Surplus on international and other uncapped teaching
£3,232m
The deficits it is asked to cover
−£5.23bn
Sector position
−£2.00bn
As reported for 2023–24, the sector was already £2.0bn short on a full economic cost basis — before any change to international recruitment.
For context: 119 of 279 providers (42.7 per cent) forecast a deficit for 2025–26 on their own assumptions, and 56.6 per cent of forecast growth in course fee income to 2028–29 is expected to come from overseas fees.
Measure: £ million, full economic cost basis. Coverage: 128 higher education institutions in England and Northern Ireland (TRAC); 279 providers in England (OfS forecasts). 2023–24 outturn, with OfS forecasts to 2028–29.
What this chart does not show (4)
This is arithmetic on a sector aggregate, not a forecast, and not a model of any institution.
It assumes the other activity lines are unchanged. In practice a recruitment fall also reduces some costs — but far more slowly than it reduces income, which is the point the chapter makes.
TRAC uses full economic cost. A TRAC deficit is not a cash shortfall in the same year.
The surplus is not evenly spread. Institutions most exposed to international recruitment would move much further than the sector average.
How the figures were prepared: The interaction is deliberately simple arithmetic on published figures: the reader's chosen percentage is applied to the published non-publicly funded teaching surplus, and the sector position is recalculated. Nothing else is modelled.
View as a table
Sector position on a full economic cost basis as the surplus on non-publicly funded teaching changes. TRAC 2023–24 baseline.
Change in international fee income
Surplus on that activity
Sector position
-50%
£1,616m
−£3.62bn
-40%
£1,939m
−£3.29bn
-30%
£2,262m
−£2.97bn
-20%
£2,586m
−£2.65bn
-10%
£2,909m
−£2.33bn
0%
£3,232m
−£2.00bn
+10%
£3,555m
−£1.68bn
+20%
£3,878m
−£1.36bn
The two deficits, and what covers them
What each activity costs against what it earns. Teaching British students loses money. Research loses more. One column pays for both.
Measure: £ million surplus or deficit; cost recovery as a percentage of full economic cost. Coverage: 128 higher education institutions in England and Northern Ireland. 2023–24.
What this chart does not show (5)
TRAC uses full economic cost, not cash accounting. A TRAC deficit is not the same as a cash loss in the year.
Covers 128 institutions in England and Northern Ireland only. Scotland and Wales are not included.
'Other (non-commercial)' shows a very high recovery rate because it carries little attributed cost; it is not a meaningful trading surplus.
Sector aggregates conceal a wide spread. Individual institutions differ sharply from these figures.
The five activity lines sum to -£2,002m against a published sector total of -£2,003m. The £1m difference is rounding in the source table, not an error here.
How the figures were prepared: Figures reproduced as published. No rebasing or adjustment. Percentages are cost recovery against full economic cost.
View as a table
TRAC 2023–24, 128 institutions in England and Northern Ireland.
Activity
Surplus / (deficit)
Cost recovery
Publicly funded teaching
−£1,693m
89.2%
Research
−£5,367m
66%
Other (income-generating)
−£136m
98.1%
Non-publicly funded teaching
+£3,232m
143.1%
Other (non-commercial)
+£1,962m
906.4%
Sector position
−£2,003m
95.7%
Where this goes next
This is the question the chapter opens with and the mechanism it identifies. What it concludes — and what follows from it — is in the book.