| Practice area: | Economics of Education | Education and Labour Markets | Higher education | Public Policy |
|---|---|
| Client: | Higher Education Policy Institute and Universities UK International |
| Published: | 09 September, 2021 |
| Keywords: | impact assessment modelling quantitative analysis Cost-benefit analysis Education and labour markets |
With 496,000 international students studying for qualifications at higher education institutions across the United Kingdom – equivalent to 20% of all HE students – international students contribute significantly to the economic and social prosperity of the United Kingdom, both in the short term during their studies as well as in the medium to longer term after they graduate.
Given the continuing importance of international students as a source of export revenues, London Economics were commissioned by the Higher Education Policy Institute (HEPI) and Universities UK International (UUKi) to re-estimate the benefits and costs to the United Kingdom economy associated with international students, focusing on the 2018/19 academic year.
Economic benefits associated with international students
Combining the direct, indirect, and induced economic benefits of the tuition fee, non-fee and visitor income associated with international students in the 2018/19 cohort, the total benefit to the UK economy associated with a typical EU domiciled student was estimated at approximately £94,000. The comparable estimate per non-EU student stood at approximately £109,000. The difference between the two estimates is primarily driven by the relatively higher tuition fees charged to non-EU domiciled students as compared to students from EU countries studying at UK HEIs. Aggregating across the entire 2018/2019 cohort of first-year students, we estimate the total economic benefits of international students to the UK economy to be approximately £28.8bn over the entire period of their studies, of which £6.1bn is generated by EU students, and the remaining £22.7bn is generated by non-EU students.
Economic costs associated with international students
Combining the costs associated with the teaching grants paid to UK higher education institutions (for EU students), student support in the form of tuition fee and/or tuition fee grants (again for EU students only), as well as the costs of providing ‘other’ public services to international students and their dependants, the cost to the Exchequer per typical EU domiciled student was estimated at £22,000. The comparable figure per non-EU student was estimated at £7,000.
Aggregating across the 2018/2019 cohort of first-year students, the total cost of international students to the UK economy was estimated at £2.9bn, split roughly equally between EU (£1.4bn) and non-EU (£1.4bn) domiciled students.
The net economic benefit associated with international students
The net economic impact per student was estimated to be £71,000 per ‘typical’ EU domiciled student in the 2018/19 cohort, and £102,000 per non-EU domiciled student (see Figure 6). In other words, every 14 EU students and every 10 non-EU students generate £1m worth of net economic impact for the UK economy over the duration of their studies. Expressed in terms of benefit to cost ratios, dividing the gross economic benefit associated with EU domiciled and non-EU domiciled students, the analysis suggests that there is a benefit to cost ratio of approximately 4.2 and 16.1 associated with hosting EU and non-EU students in the UK, respectively (and 10.1 on average across both domiciles).
Aggregating across the total cohort of first-year international students enrolled with UK HEIs in the 2018/19 academic year, the total net impact of international students on the UK economy was estimated to be £25.9bn. Approximately £4.7bn of net impact was associated with EU domiciled students, while the remaining £21.3bn was generated by non-EU domiciled students.
Net impact by region and parliamentary constituency
On average, international students make a £40m net economic contribution to the UK economy per parliamentary constituency, which is equivalent to £390 per member of the resident population (after all costs have been accounted for). The average impact was highest for parliamentary constituencies in London (with an average net impact of £88m per constituency, equivalent to £760 per resident). The average impact per parliamentary constituency in the North East and Scotland was estimated at £460 per member of the resident population; between £370 and £400 per member of the resident population in the East and West Midlands and Yorkshire and the Humber; and between £270 and £340 per member of the resident population in the North West, South East, South West, the East of England, and Wales.
The analysis is further split by parliamentary constituency. The analysis illustrates that the contribution of international students to the UK economy is clustered around the location of higher education institutions – but also demonstrates the economic contribution made by international students across the entire UK.
Reflecting the estimated number of international first-year students resident in Sheffield Central (2,980), the analysis indicates that the contribution to the UK economy of the international students in the 2018/19 cohort resident in Sheffield Central stands at approximately £290m, which is equivalent to £2,520 per member of the overall resident population (see Table below). The other constituencies where international students make the greatest contribution to the UK economy are Nottingham South (£261m (£2,390)), Holborn and St Pancras (£243m (£1,790)), Newcastle upon Tyne East (£240m (£2,510)), East Ham (£217m (£1,450)) and Cambridge (£214m (£1,860)).
There are constituencies from across almost all UK regions represented on the top-20 list, with international students in Manchester Central (North West) contributing £211m (£1,570); Oxford East (South East) contributing £211m (£1,740); Birmingham Ladywood (West Midlands) contributing £183m (£1,450); Cardiff Central (Wales) contributing £181m (£2,050); Bristol West (South West) contributing £175m (£1,400); and Glasgow Central (Scotland) contributing £171m (£1,880).
Total costs, benefits, and impact of international students in the top 20 parliamentary constituencies in terms of net impact
| Rank | Parliamentary Constituency | # of 1st year students | Benefits | Costs | Net impact | Net impact per resident |
| 1 | Sheffield Central | 2,980 | £313m | £23m | £290m | £2,520 |
| 2 | Nottingham South | 2,575 | £283m | £22m | £261m | £2,390 |
| 3 | Holborn and St Pancras | 2,670 | £272m | £29m | £243m | £1,790 |
| 4 | Newcastle upon Tyne East | 2,455 | £263m | £22m | £240m | £2,510 |
| 5 | East Ham | 2,385 | £243m | £26m | £217m | £1,450 |
| 6 | Cambridge | 2,180 | £238m | £24m | £214m | £1,860 |
| 7 | West Ham | 2,330 | £237m | £25m | £212m | £1,340 |
| 8 | Manchester Central | 1,950 | £230m | £19m | £211m | £1,570 |
| 9 | Oxford East | 2,135 | £233m | £22m | £211m | £1,740 |
| 10 | Liverpool, Riverside | 1,885 | £222m | £18m | £203m | £1,770 |
| 11 | Leeds Central | 2,030 | £213m | £16m | £198m | £1,490 |
| 12 | Bermondsey and Old Southwark | 2,020 | £206m | £22m | £184m | £1,450 |
| 13 | Birmingham, Ladywood | 1,860 | £201m | £17m | £183m | £1,450 |
| 14 | Leicester South | 1,795 | £197m | £15m | £182m | £1,530 |
| 15 | Cardiff Central | 2,070 | £206m | £25m | £181m | £2,050 |
| 16 | Bethnal Green and Bow | 1,935 | £197m | £21m | £176m | £1,410 |
| 17 | Bristol West | 1,720 | £191m | £16m | £175m | £1,400 |
| 18 | Glasgow Central | 2,065 | £199m | £28m | £171m | £1,880 |
| 19 | Coventry South | 1,715 | £185m | £16m | £169m | £1,600 |
| 20 | Portsmouth South | 1,635 | £178m | £17m | £161m | £1,500 |
| Average (all constituencies) | 420 | £44m | £4m | £40m | £390 | |
Note: Numbers of students are rounded to the nearest 5; total estimates are rounded to the nearest £1 million; and estimates per resident are rounded to the nearest £10.
All estimates are presented in 2018/19 prices and discounted to reflect net present values. Source: London Economics’ analysis
The full report can be found here while the Summary report can be found here.