The debate around international students in the UK has intensified following the Labour Party’s announcement of a proposed levy on international student fees. This measure, unveiled by UK Education Secretary Bridget Phillipson at the Labour Party conference, is designed to fund new maintenance grants for domestic students from low-income families. While the intention may be to create a fairer education system for British students, the reaction from universities and student groups—particularly those representing Indian students—has been overwhelmingly critical.
This article takes a deep dive into what the levy means, why it has sparked alarm among higher education institutions and student bodies, and how it could reshape the UK’s global standing as a top destination for international learners.
What Is the Proposed Levy on International Students?
Labour’s plan is relatively straightforward: impose a levy, reportedly around 6%, on the tuition fees paid by international students studying in the UK. The revenue from this levy would be allocated to fund means-tested maintenance grants for domestic students from lower-income backgrounds.
In theory, this policy creates a redistribution mechanism—international students’ fees would indirectly support access to higher education for British students who may struggle financially.
However, critics argue that this approach is short-sighted, potentially damaging the very system it seeks to support.
Why Are Student Groups Concerned?
One of the strongest voices of concern has come from INSA UK (Indian National Students Association UK). Its president, Amit Tiwari, pointed out that the levy would disproportionately impact Indian students, who represent the second-largest international student group in the UK after Chinese students.
Tiwari warned:
“Indian students alone contributed over £4 billion to the UK economy last year. Adding a new charge will push them towards Canada, Australia, and the US.”
This statement highlights the delicate balance between making education accessible for local students and maintaining the UK’s competitiveness as a global education hub.
Indian Students: A Key Demographic in the UK
The numbers speak for themselves. In the year ending June 2025, 98,014 study visas were granted to Indian nationals, making them the second-largest international student group in the country. Indian students contribute not just through tuition fees but also through living expenses, housing, transport, and retail spending. Their economic impact is estimated in the billions.
If the levy were imposed, many Indian students might consider alternative destinations like Canada, Australia, or the United States—all of which already compete aggressively for international student enrolment.
The Financial Impact on Universities
Beyond students, universities themselves are sounding the alarm. A study by consultancy firm Public First suggests that a 6% levy could have severe financial consequences for the UK higher education sector.
The research predicts:
- A reduction of 16,100 international students in the first year alone.
- A loss of £240 million in tuition fee income in that first year.
- Over five years, the decline could reach 77,000 international students, leading to a £2.2 billion revenue shortfall.
These numbers are deeply concerning, especially given that around 40% of UK universities are already operating at a deficit. The levy could exacerbate financial instability, forcing institutions to cut courses, reduce staff, or even close departments.
The Subsidy Question: Who Really Benefits?
Jonathan Simons, partner at Public First, highlighted a critical paradox in the Labour plan. He noted that international students already play a vital role in subsidising UK higher education. Their higher tuition fees often allow universities to keep courses affordable and accessible for domestic students.
Simons cautioned:
“A levy will lead to a further loss of jobs and places for UK students. There is a danger that the very students the government wishes to help won’t be able to access a course because the international students won’t be there to subsidise them.”
In other words, by trying to help low-income domestic students, the policy may inadvertently reduce opportunities for them.
Potential Domino Effect on the UK Economy
The financial risk extends beyond universities. International students contribute to the UK economy in numerous ways:
- Tuition fees: A major revenue stream for universities.
- Local spending: On rent, food, travel, and retail.
- Employment: Many universities and local businesses depend on international students for financial sustainability.
If a significant number of students choose to study elsewhere, towns and cities that thrive on student spending could face economic downturns. From local landlords to small businesses, the ripple effects could be severe.
Global Competition: The Bigger Picture
International education is a highly competitive market. Countries like Canada, Australia, and the US have actively positioned themselves as welcoming destinations for international students. Policies that make studying in the UK more expensive or uncertain could drive prospective students into the arms of these competitors.
For example:
- Canada has recently expanded post-graduate work opportunities for international students, making it more attractive.
- Australia is heavily marketing itself as a diverse, inclusive study destination.
- The United States, despite some political challenges, remains the largest global hub for higher education.
By introducing a levy, the UK risks undermining its competitive edge.
How Students and Universities Are Responding
The reaction to the levy proposal has been swift and loud. Student groups, particularly those representing international communities, are urging Labour to reconsider. Universities, too, are voicing concerns about how the policy could weaken the UK’s reputation and reduce financial stability across the sector.
There is a growing call for Labour to explore alternative funding models that do not place additional burdens on international students. Suggestions include increasing direct government investment in higher education, expanding partnerships with private companies, or revisiting taxation options.
Conclusion: A Policy at a Crossroads
Labour’s proposed levy on international student fees aims to create fairness in the education system, but critics warn it could backfire. While the intention of supporting low-income domestic students is laudable, the unintended consequences—financial instability for universities, reduced opportunities for UK students, and the loss of global talent—pose serious risks.
For Indian students in particular, the message is clear: higher costs may drive them to explore more affordable and welcoming destinations. For UK universities already grappling with deficits, the levy could be a tipping point.
As the debate continues, policymakers must weigh the immediate benefits against the long-term consequences. The UK’s global reputation as a leading education destination is on the line, and the choices made now will shape its competitiveness for years to come.
