UK loses $3.9bn as tighter immigration rules drive fall in international students

July 23, 2026

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The United Kingdom (UK) economy has lost an estimated £2.9 billion ($3.89 billion) following a decline in international student enrolment which underscores the economic trade-offs of the government’s tougher immigration policies.

According to a research by London Economics, commissioned by the Higher Education Policy Institute (HEPI) and Kaplan International Pathways, it was discovered that the number of first-year international students fell by about 54,500, or 12 percent, over the past two academic years after the government tightened visa rules, including restrictions on dependants accompanying international students.

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The report estimates that each international student contributes an average of £100,000 to the UK economy through tuition fees, living expenses and spending by visiting family and friends.

Despite the decline, 685,565 international students enrolled in UK higher education institutions during the 2024/25 academic year.

The current international student cohort is projected to generate £45.1 billion in economic activity over the course of their studies. After accounting for an estimated £4.7 billion in public spending on services such as healthcare and public safety, the UK is expected to realise a net economic benefit of £40.4 billion, equivalent to a return of £9.70 for every £1 spent.

The report found that the economic benefits of international students are spread across every part of the UK, although the scale varies by constituency.

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These stricter immigration measures have made international students to face increasingly restrictive immigration policies over the past two years.

Some of these immigration measures is the barring by the government of postgraduate taught students from bringing family members, increased financial maintenance requirements for student visa applicants and announced that, from January, and a reduction on the post-study graduate route for bachelor’s and master’s graduates from two years to 18 months.

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Another is the increased financial requirement for students who must now demonstrate between £1,171 and £1,529 per month for living costs, depending on where they intend to study.

The report found that the economic benefits of international students are spread across every part of the UK, although the scale varies by constituency.

Commenting on the decline in revenue caused by the decline of international students, Rose Stephenson, director of policy and strategy at the Higher Education Policy Institute, said policymakers should weigh the economic consequences alongside the political objectives of reducing migration.

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“If ministers decide to further reduce international student numbers, they should be clear that there will be economic costs as well as potential political benefits,” Stephenson said.

Linda Cowan, managing director at Kaplan International Pathways, said that as a result of this, competition for international students has intensified as more countries seek to attract global talent.

She noted that the traditional “Big Four” study destinations, the United States, the United Kingdom, Australia and Canada now face increased competition from a wider group of countries investing heavily in international education.

“The UK is home to some of the world’s foremost universities, but we cannot rely on reputation alone. We must continue to demonstrate the value of a UK education and ensure international students feel welcomed from the moment they consider applying,” Cowan said.

The report comes as UK universities face mounting financial pressure from weaker international enrolment, with several institutions warning of budget deficits, job losses and potential insolvency.

Analysts say continued declines in overseas student numbers could weaken university finances, reduce local economic activity and erode the UK’s competitiveness in the global education market at a time when rival destinations are stepping up efforts to attract international talent.

Ngozi Ekugo

Ngozi Ekugo is a Senior Correspondent at BusinessDay. She holds a Masters in management from the University of Lagos, an undergraduate from University of Lagos, and is in an alumni of Queen's College. Shes currently an associate member of the Chartered Institute of Personnel Management (CIPM). She has a brief experience at Goldman sachs, London in its Human Capital Management division. She is interested in human capital development and is leveraging her varied experience across sectors to report labour and global mobility trends for stakeholders to make informed decisions.

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