The government¡¯s proposed levy on international student fees could prove to be the difference between surplus and deficit for more than a dozen universities, according to a new analysis.

Concerns are growing about the potential financial impact of the policy as civil servants prepare to present policy details to ministers in September, ahead of the autumn Budget.

The move, first proposed in Labour¡¯s immigration White Paper, could take 6 per cent of fees paid by international students, bringing an estimated total cost to the English sector of ?620 million per year.

Around half (?367.3 million) of the total payout would come from Russell Group members if applied to the whole of the UK, costing some upwards of ?20 million each.

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However, these institutions are also more likely to be able to absorb or pass on the costs.

Instead, it could be middle-tier universities that recruit?fewer international students that are pushed into financial difficulties by the policy as?¡°they tend to have quite wafer-thin margins as it is,¡± said Jamie Warner, a university finance specialist.

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Institutions that recorded small surpluses in 2024 include the universities of Chester (?100,000), Cumbria (?100,000) and Sunderland (?700,000).?

According to Nicholas Dillon, director at consultancy Nous Group, 14 universities could have gone into a financial deficit last year if the levy had been in place.?Dillon told?̽»¨ÊÓƵ?there are two types of institutions particularly at risk.

¡°There are those who are already in a marginal position in terms of how well their finances are going, and this just tips them into a negative position,¡± he said.?

¡°The other ones are those who are highly reliant on international students, and whilst most of them do manage to still come out on top and remain in a very positive position, there are some that see¡­their overall margin as an institution shattered.¡±

He added that some institutions are paying recruitment agents over 20 per cent of international students¡¯ fees, while recruitment compliance costs are ¡°very real¡± and likely to become ¡°more important¡± with?proposed changes to visa compliance rules.

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If the levy goes ahead, ¡°there¡¯s going to be an increasing number of universities for whom international students become a net loss-maker,¡± warned Dillon, leaving the sector facing an increasingly limited pool of revenue-generating activities, with home students and research already loss-making.?

Although calculations are based on assumptions around recruitment levels and tuition fees, representatives from Universities UK International (UUKI) confirmed their modelling had concluded a similar picture, with over a dozen universities set to be pushed into deficit due to the levy.?

¡°We are concerned about the differential impact across the sector,¡± said Harry Anderson, deputy director at UUKI.?

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¡°Universities will vary in their ability to offset the levy by increasing international recruitment due to their capacity, specialism or particular set of entry requirements.?

¡°Some may be able to pass on these costs to students ¨C although that is far from certain ¨C whereas others will have to find ways to absorb the cost of the levy. This will only add fuel to the fire and exacerbate the financial challenges facing many members.¡±

Sunderland vice-chancellor David Bell said, ¡°While we would prefer that the levy on international student income wasn¡¯t introduced, the university would be well able to absorb it.?

¡°We ended the 2024-25 financial year with a good surplus and have a similar budget this year, with an additional strong contingency as further ballast.¡±

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Warner warned that, if it goes ahead, the levy may prompt more cuts. ¡°I think some universities won¡¯t actually be able to cut any further, so they could be on the verge of having to be bailed out.¡±

helen.packer@timeshighereducation.com