A £1,000 flat fee should be charged to all international students at UK universities for each year of their study to avoid “unfairly” penalising leading institutions with a fee-based levy, a thinktank says.

In a new report, centre-right organisation Policy Exchange supports the government’s proposed international student levy – an idea first mooted in Labour’s immigration White Paper – but says it should be students, not universities, paying the charges.

While the government has suggested introducing a 6 per cent levy on all international student fee income, the report says doing so would “unfairly penalise top universities” that charge higher fees and would therefore lose more money. 

Instead, it suggests students pay the fee directly – a move that would “increase the cost of studying in the UK and therefore deter some students from coming here to study”.

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Although this would lead to a drop in the number of students coming to the UK, “within the context of often very high international fees, a £1,000 annual levy is unlikely to be perceived as a major cost impediment”, it continues.

It goes on to suggest that students at the most research-intensive universities could be exempt from the levy, as their tuition fees “play a key role” in cross-subsidising research.

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The report, Education Not Immigration, claims that higher education has become a path to migration and proposes wide-ranging measures to limit immigration by students to the UK, including scrapping the graduate route visa – which the government is already planning to reduce by six months – and raising English language requirements.

It also argues against granting domestic fee rates or access to student finance to students from the European Union (EU) as the UK government continues to negotiate a potential youth mobility scheme with EU leaders. 

If agreed, the scheme would allow young people from the UK and EU member states to study, work and live in each other’s countries for a limited period of time. 

Eligibility for domestic-level university fees is thought to be a sticking point for any deals, with EU leaders likely to push for this.

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The report warns that exempting European students from international fees, which are usually much higher, could “create a black hole in university finances”, resulting in them losing £650 million a year in fee income. 

It warns that if the student loan and grants system is also extended to EU students, £7 billion could be lent out in the first five years if EU student numbers recovered to pre-Brexit levels. 

This, it says, could leave the taxpayer shouldering up to £2 billion over five years in the form of unrepaid EU student debt. 

In a foreword to the report, David Goodhart, head of demography, immigration and integration at Policy Exchange, says: “What must cease is the marketing of our universities as a backdoor to long-term migration. The failure to address this has meant we have welcomed far too many who have been incentivised to come here for the wrong reasons. 

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“Restoring control to the international student regime would serve as a vital first step to addressing popular disillusionment with both the UK’s immigration system and its higher education sector.”

Neil O’Brien, shadow minister for education, was due to speak at the launch of the report on 2 July. He was expected to say: “It’s not just taxpayers who are losing out. The current system isn’t working for too many students, who are promised great things but find themselves having to pay back huge sums on very low wages. 

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“Too many students are being ripped off and we have to ask whether there are better uses of taxpayers’ money that will leave young people better off.”

helen.packer@timeshighereducation.com