How Much Do International Students Contribute to the UK Economy

How Much Do International Students Contribute? 

The number of international students in the UK is at its highest in decades. About 758,855 international students were reportedly pursuing various degrees in the country for the 2022/23 academic year. In the previous year, the number was around 680,000, meaning nearly a 12% increase.

A recent study showed that international students starting their studies in 2020/21 would generate up to  £41.9 billion for the UK economy. This is compared to the estimated £4.4 billion it costs the UK to host them and any dependents they may have. This implies a net benefit of £37.4 billion for the UK economy.

Findings show that the average cost of studying an undergraduate course in the UK is around £22,000 yearly. For postgraduate degrees, the cost is lower, at around £17,000. In addition, each international student spends an average of £1300 to £1400 in London and £900 to £1300 in the rest of the UK to cover accommodation, groceries, bills and other living expenses.

Interestingly, they are also a great advantage to the UK education sector as well as its workforce, providing a significant boost to the economy. As the legislation banning dependents took effect in January 2024, it is expected there will be fewer overseas recruitments. This begs the question: how much will the ban affect higher education revenues and the economy in general? While it might be too early to quantify the exact overall effects, some university leaders and political figures fear it would hurt the economy.

According to a study, a single cohort of international students in the UK contributes up to £3.2 billion to the economy, with income tax being one of the significant sources. Indeed, many international students in the UK enrol in jobs, as allowed by the immigration rules. A student visa holder enrolled in a full-time degree-level course can work part-time while studying, but they’re free to work round the clock on vacation.

International students work different kinds of jobs permitted by their visa status, and, as of the 2021 census, one in three international students in England and Wales was employed.

Do International Students Stay After Completing Their Studies? 

For home students, a world-leading higher education system means they can benefit the UK workforce with the skills and qualifications acquired during their studies. However, For international students, their right to stay ends once their study visa expires. They then must choose between returning to their home country or applying for a post-study visa so they can work – the path to long residency or British citizenship is much longer. At what rate does the UK retain the international talent its institutions train?

A 2017 study indicated that about 97% of international students leave the UK after completing their studies. Recently, however, there appears to be a change in trend. Many students who complete studies in the UK from less developed countries are interested in staying back.

In contrast, those from more developed countries tend to leave. This is evident from the demographic data of sponsored study visas in the country. Data from GOV.UK shows over 486,000 study and student dependent visas were issued in the year ending June 2022, the highest in recent years. The previous highest was in 2010, at 307,394, lower than June 2022 by over 170,000. Interestingly, for student visas issued to main applicants, India, China, Bangladesh, and Nigeria top the list in that order. India and China alone make up about 50%.

However, looking at the study visa dependents, the top countries are Nigeria, India, Pakistan, Bangladesh and Sri Lanka. The proportion of sponsored study visas issued to Nigerian dependents increased from 19% in 2019 to 51% in 2022. For India, the jump was from 8% to 22%. Conversely, China doesn’t make the top five, despite having the second most study visa to principal applicants. This suggests that many Chinese nationals studying in the UK don’t intend to remain after graduating.

The Game Changers: Post Study Graduate and Skilled Worker Visa Routes 

For students from less developed countries, recent visa policies may have caused a spike in interest in remaining in the UK after graduating. For instance, between 2012 to 2017, UK institutions saw a 27% drop in enrolment from Nigeria, making the government name it one of its five high-priority targets when implementing the 2-year post study graduate route as part of its international education strategy in 2019. This proved effective as applications from the African country started increasing. By 2022, it recorded a whopping 65,929 student visas, an increase of 29,146 compared to 2021 data. Compared to 2019, the country had the largest percentage increase of 686%.

The post-study visa route is more accommodating for fresh graduates than its alternative: the Skilled Worker Visa, especially for degree students. Statistics show that only 35% of students who graduated in the 2018/2019 academic year got new visas to stay in the UK. That was before the reintroduction of the post-study route.

However, while the visa accommodates bachelor and postgraduate students, the latter appears to have the upper hand. Up to 77% of past international students working in the UK studied postgraduate courses, and up to 60% managed to land a full-time job nine months after graduation. 2022 was the first full year since the introduction of the post study graduate route, and 72,893 students were granted visas under the route.

Many Students Switched Visas on Arrival

The ability to switch routes from student to skilled worker visa might have also contributed to the increase of international students staying longer. The skilled worker visas issued for the health and social care sector showed a whopping increase of 179%, resulting in year-on-year growth from 7,711 in Q3 2021 to 21,543 in Q3 2022.

While the government data source did not state how many recipients switched to the route, it is believed that a considerable number of the total must have come from those who transitioned from student visas.

In 2022, many students were switching to work visas on arrival, which suggests they only used the study route as a means to work and settle in the UK. While this was a legal option, it was detrimental to UK schools as many of those students abandoned their studies after gaining the skilled work visa, resulting in profit loss to the affected universities. To curb the trend, the government has put an end to this privilege – meaning international students must now complete their programmes first before being eligible to switch visas.

From January 2024, only postgraduate students enrolled in research programmes can bring their families along. Consequently, this could significantly reduce the number of study visa applications, as the UK might be less appealing to overseas students. It could mean a downtrend in the contribution of international students to the UK economy. However, the UK government aims to close the gap by making it easier for skilled workers to enter the country.

Conclusion 

More and more foreign nationals are entering the UK to study in recent years, as the UK compares favourably to other nations for international students. Since they can work and study, these overseas students contribute in different ways to the UK economy, raising multiple billions for the country over the years. After completing their studies, some students remain, while others leave. Those who successfully extend their stay further help boost the UK economy. On the other hand, those who leave take their experiences back to their home countries.