EU fees change could cost English universities £7 million a year

Some English universities could lose up to £7 million each year if undergraduates from the European Union are charged the same fees as those from outside the bloc after Brexit, a Times Higher Education analysis suggests.

If the feared drop in EU student enrolment materialises, the loss of fee income would be high enough to push four institutions into deficit and worsen shortfalls at many others, according to the figures.

However, the data also suggest that, if institutions kept the fall in student numbers well below 40 per cent, then they would actually increase fee income because of the extra amount that they would be able to charge such undergraduates.

The analysis comes after it emerged that the government may scrap the home fee status of EU citizens studying at universities in England from 2021-22. This would likely mean such students being charged the same as those from outside the EU and losing access to public loans.

THE looked at the effect such a change might have on undergraduate fee income for English universities, assuming that each “lost” student cost £9,250 (the current maximum annual fee) and that universities charged those remaining an extra £6,000 a year (based on the latest figures for average overseas fees compiled by the Complete University Guide).

Using data on 2017-18 student numbers from the Higher Education Statistics Agency, the analysis suggests that if English institutions lost 57 per cent of their full-time EU undergraduates, the total annual drop in income for the sector could be about £185 million. A 57 per cent drop is the average sector change in EU enrolments predicted in a study on the impact of such a policy carried out by London Economics for the Higher Education Policy Institute in 2017.

The THE analysis shows the drop in income would be £2 million or more at 35 institutions, more than a quarter of the English sector, with this rising to more than £7 million for institutions with large cohorts of EU students. The figures are also likely to be an underestimate as sub-degree undergraduates, part-time students and postgraduates were not included.

Such a fall in income would inevitably hit universities with the heaviest reliance on EU students the hardest. For 32 universities, it would amount to at least 1 per cent of their total income from all sources.

More than a quarter of English universities failed to record a surplus in 2017-18 of more than 1 per cent of total income and the analysis suggests four institutions would be pushed into deficit by the EU fee change.

However, the results become very different when a lower drop in EU undergraduate numbers is applied across the board: any fall lower than 39 per cent would lead to universities increasing their income overall and if the drop was limited to 30 per cent then 50 institutions would get at least £1 million a year more.

The London Economics analysis split different types of universities into clusters and suggested the fall could be nearer 40 per cent at some institutions. It also showed how a fall in the value of the pound would make the UK even more attractive as a place to study and lead to universities making even bigger net gains.

Nick Hillman, director of Hepi, said some of the opposition to the potential EU fee rise reflected “a basic misunderstanding” of the actual dynamics of such a change.

“If universities were certain they could do well financially from EU students after Brexit, they would presumably spend more money on searching for potential students the way they do in countries outside Europe,” he said.

simon.baker@timeshighereducation.com