Dr Julian Costas-Fernandez, Dr Angus Holford, and Dr Greta Morando outline their recently published research which finds that international students do not damage the educational or labour market outcomes of the domestic students they study alongside.
International students and their dependents are a rare migrant group in that the number of them in the UK can be rapidly reduced through government policy. The government has restricted family visas for the dependents of taught students. And in recent weeks the claim that international students crowd out domestic student participation and opportunities has been widely circulated, leading to calls for international student numbers to be reduced further.
But our recently published study shows that studying alongside increasing numbers of international students has had no detrimental effects on the economic outcomes of British students.
The UK higher education system is facing a difficult financial situation with some universities at risk of bankruptcy. Years of underfunding and a system financially dependent on tuition fees – which have been frozen for domestic students since 2017 – has left universities heavily reliant on overseas students’ tuition fees.
The number of overseas students coming to study in UK universities has risen by 70% since 2010. The revenue from the tuition fees of overseas students increased by 71% in 5 years from £5.4bn in the 2016-17 academic year to £9.7bn in 2021-22. This expansion in international student numbers and revenue has enabled UK universities to take on more British students. This has particularly benefited the numbers of disadvantaged British students attending university. It seems likely that disadvantaged British students would also be the first to lose out if this expansion was reversed.
Unless significant and immediate structural changes are undertaken, continuing to attract a large number of overseas students is a necessity for survival for many UK higher education institutions.
Nevertheless, international student enrolment is now expected to stagnate or decline, due to a decrease in the attractiveness of studying in the UK. This is partly financial, due to the increasing strength of the pound. But it is also due to policies such as the new limits on family visas for the dependents of overseas students.
Given the reliance of the UK higher education system on overseas students, it is important to understand the impact on UK students. Evidence to date points to a zero or a positive effect of overseas students on domestic students’ ability to find a place at a UK university. If anything, overseas students subsidise domestic students’ participation, as also happens in the United States.
Our new study investigates whether the proportion of overseas students in university undergraduate programmes affected the academic performances and early labour market outcomes of their UK-domiciled peers.
We analysed data on the population of undergraduate students who enrolled at universities in England in the academic years 2007/8-2010/11. We tested whether studying with more overseas students (as measured by the share of overseas students in the first year of the undergraduate programme) had a causal impact on the probability of domestic (native) students successfully graduating, their degree class, or finding a graduate-level job within six months of graduating.
We found no significant impact on any of these outcomes. In fact, we found that studying alongside more international students meant that that higher-performing British students (those in the top third according to A-Level and equivalent tariff scores) on average earned higher salaries, 6 months after graduation, than they otherwise would have done.
We did find that studying with more EU students discouraged domestic students already at university from switching into degrees in Science, Technology, Engineering and Maths (STEM) fields, and made it more likely that they would switch from a Russell Group to non-Russell Group university. However, these scenarios are very rare, and did not harm the affected students’ later outcomes.
This study sheds new light on what impact international students have on the UK economy by looking at a specific aspect that hasn’t been studied before at the national level: the direct effect that overseas students have on the education and labour market performance of the domestic students they study with.
We conclude that there is no evidence of overseas students being detrimental for domestic students’ probability of graduating and for their degree classification, nor there is any significant impact on their labour market participation and the quality of their employment at six months after graduation. These findings are consistent with evidence from domestic students’ exposure to overseas students within a single course and university in the UK and the US.
The findings of this study should be considered in the context of the benefits that overseas students provide to the UK. Alongside cross-subsidising UK students’ participation in higher education through revenue from tuition fees, a typical higher education student from overseas (outside of Europe) brings a net economic benefit of £95,000 (or £68,000 for students from the EU) to the UK economy.
Overall, overseas students contribute to the economy, help to fund universities, and can enrich the experiences of all university students and staff, by contributing to the diversity of the student body. As our study shows, they also don’t harm the educational or labour market outcomes of the domestic students they study alongside.
By Dr Julian Costas-Fernandez, Surrey Future Fellow, University of Surrey,Dr Greta Morando, Research Fellow, UCL Social Research Institute and Assistant Professor in Economics, University of Bath, and Dr Angus Holford, Senior Research Fellow, Institute for Social and Economic Research, University of Essex.
