UK unis to take £1,010m hit over international student levy

Data

The UK's upcoming levy on international student fees will batter universities' bottom lines by £110 million more than previously anticipated, according to a new government impact assessment.

by Beth Kennedy

October 28 2026

4 Min Read

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In the first three years of the £925-per-international-student levy being applied, UK providers are expected to take a £1,010m hit in lost fees – significantly more than the government predicted just last year , when it estimated that they would lose out on £900m.

The policy is also expected to raise less money – earmarked to be spent on maintenance loans for domestic students – that previously thought, with projections suggesting that £1,340m will be levvied compard to the £1,390m predicted in a 2025 impact assessment.

An updated impact assessment on the policy landed this afternoon, on the same day HM Treasury snuck a line into its 2026 Budget that revealed it would extend the Graduate Route back up to two years for grads of “high-compliance universities” with strong labour market outcomes. Details of the policy remain unclear.

However, the new impact assessment tells a happier story about the number of international students the UK is expected to lose out on as a result of higher fees (with most instutions expected to pass on levy costs to students).

Some 11,500 fewer international students are expected to make their way to the UK in the levy’s first seven years, according to today’s impact assessment. This compares to a projected 16,500 students lost projected in 2025’s assessment – a differential of 5,000.

Source: Department for Education

However, the government stressed that future international student numbers were “inherently uncertain”. “The international student market is competitive, and inflows to the UK depend on a range of factors, including recruitment strategies from international competitors, exchange rates and other economic variables,” it said.

In more worrying news for many of the UK’s higher education institutions, today’s impact assessment acknowledges that the levy will not affect all providers equally.

The international student market is competitive, and inflows to the UK depend on a range of factors Department for Education

A two-tier system has emerged, where higher ranking universities are expected to be able to pass on a higher proportion of levy costs to their international students without seeing too much of a recruitment drop off compared to lower ranking institutions.

So-called Tier 1 (Oxford University, Cambridge University and Imperial College London) and Tier 2 (the remaining universities in the Complete University Guide’s top 20) are expected to fair better than lower-ranked (Tier 3 and 4) institutions – mirroring the expected effect of more stringent compliance measures universities must now adhere to.

Commenting on the news, director (education) at PF Global, Jess Lister, said the announcement was “timely as the sector is gearing up for another attempt to quash the levy”.

Lister noted that previous modelling from Public First had “junked the idea providers would be able to simply pass on all the costs as the Home Office was assuming”.

“Pleased to see how our very rapid turn around modelling is holding up 1.5 years later now the government has gotten around to doing its own analysis,” she said.

The levy has drawn serious criticism from the UK’s higher education sector, with detractors warning that policy makers were risking one of the UK’s most lucrative industries.

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Beth Kennedy

Beth Kennedy is a journalist and editor with over 10 years' experience in specialist media. She completed her undergraduate degree in drama at the University of Exeter and has a master's in magazine journalism from Cardiff University. After a decade of reporting for primary healthcare professionals, Beth joined The PIE in 2024. Contact her at beth@thepienews.com.

View all articles by Beth

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