Beech-side views: the international fee levy is a policy in need of a plan
At the 2025 Labour Party Conference, education secretary Bridget Phillipson unveiled a bold new policy: the reintroduction of targeted maintenance grants for the most disadvantaged students in England, to be funded by a 6% levy on international student fee income.
On the face of it, this appears to be a progressive move – supporting the most disadvantaged domestic students grappling with the rising cost of living while in higher education. But scratch beneath the surface and three major unanswered questions emerge.
- How will the levy apply?
First and foremost, it is unclear whether the proposed levy will apply solely to English universities or be rolled out across the UK. While the policy was announced by the Westminster government, education in the UK is a devolved matter.
Initial headlines from Wales suggest the levy will be England-only. Welsh Education Secretary Lynne Neagle has stated unequivocally that “there will not be a levy in Wales”, reaffirming Wales’s commitment to welcoming international students without additional financial burdens.
In contrast, early reports from Scotland imply that all UK universities could be affected by the new charge. Universities Scotland has voiced concern about a potential £85 million annual cost to Scottish institutions if the levy is applied north of the border, urging the UK government to allow the Scottish government to chart its own course.
However, this of this all assumes the levy will remain an education policy. With UK Visas and Immigration (UKVI) and His Majesty’s Treasury holding UK-wide responsibilities, it is conceivable that the levy could be administered centrally, potentially making it an obligation for all UK universities.
This ambiguity raises critical questions, especially now that we know the revenue – at least in part – will fund maintenance grants for students in England, confirming the policy is a done deal for English universities.
Yet, if the levy is applied UK-wide, will institutions in the devolved administrations receive a proportionate share to reinvest in their own student support systems or other priorities of choice? Without a clear commitment to equitable redistribution, the levy risks deepening existing funding disparities across the four parts of the UK. - Who will pay?
Another major unknown is how the levy will be collected. Will it be top-sliced from the income universities receive from international students – thereby impacting institutions more than students and threatening their financial sustainability? Or will it be passed directly onto students through higher fees or as an added tax, potentially deterring price-conscious applicants?
If charged to institutions, the Higher Education Policy Institute (HEPI) estimates the levy could cost English universities £621m annually, with research-intensive institutions like UCL and the University of Manchester set to be among the hardest hit.
Yet, in a competitive global market, passing the cost onto students risks deterring applicants from price-sensitive regions. The think tank Policy Exchange has proposed a £1,000 flat charge to students, which would allow universities to retain full fee income to cross-subsidise teaching and research. But even this would reduce international student numbers, particularly as other countries actively court global talent with more generous offers.
And again, the devolved question looms large: If a tax is levied only on students entering English universities – whether as a percentage or a flat fee – it would only enhance the appeal of institutions in Scotland, Wales or Northern Ireland where such charges may not apply and the ‘sticker price’ remains lower. - Who will benefit?
Whether the levy chips away at university income or deters international students at the point of application, the result is the same: further strain on university finances at a time when they can least afford it.
The UK government has packaged the levy up with the reintroduction of maintenance grants in England, making it politically difficult for university leaders to oppose it – except, of course, in the devolved administrations where exemptions may still apply. But this intended application of the levy still raises further concerns.
The plan to introduce maintenance grants only for “priority courses” – also yet to be defined – suggests a narrowing of access rather than widening it. If maintenance grants are restricted to students on government-aligned priority courses, what happens to those wanting to pursue degrees in the arts, humanities or social sciences?
Will this create a two-tier system where only certain disciplines are deemed worthy of support, and those without financial means find their options limited? This is certainly not commensurate with the ethos of student choice in England created by the Higher Education and Research Act (2017) and upheld by the Office for Students (OfS).
Plus, what happens if the levy dries up and if international student numbers fall dramatically? Who – or what – will fund these maintenance grants then?
Whether the levy chips away at university income or deters international students at the point of application, the result is the same
Over to the chancellor
It now falls to Chancellor Rachel Reeves to answer these questions and more in her Autumn Budget on November 26. Until then, the international student levy remains a policy in need of a plan.
Without further detail, speculation around the policy risks doing more harm than good – to students, to universities and to the UK’s reputation as a welcoming destination for global talent.
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