The vital role of international students in university and country finances

  • international graduates
Published on 2023-11-24 at 10:00
Universities in leading study destinations rely on international students to get tuition fees and fill research positions. This is especially the case for postgraduate and STEM (science and technology) courses, which remain more popular among international than domestic students. 

International student fees are high – and they sustain universities' finances

In major study destinations like the UK, Australia, the US and Canada, international tuition fees are often twice or more than twice as high as domestic fees. 

As reported by QS Top Universities, the average in-state student in the US pays around US$10,000 in tuition fees per year, whereas the average out-of-state (including international) student pays around US$26,000. In the UK, the average yearly international tuition fee hovers around £22,000 – while students with ‘home fee status' pay only around £9,000 for the exact same course. Australia is the most expensive study-abroad destination: international students there are expected to fork out up to AU$50,000 (around US$30,000) per year.

These fees are a key source of funding for many universities, especially smaller ones that cannot fully rely on public funds or donations from wealthy alumni. The Australian Department of Education says that one-quarter of the revenue of their universities comes from international students. For some Australian universities, it's even 40-50% of their total revenue. It's the same situation in the UK. In 2022, a Guardian study found that British universities get 20% of their revenue from international students.

Recently, some countries have introduced or raised tuition fees for international students partly because their governments realized it's a significant revenue stream. Previously, public French universities were free for all international students, including those from outside the European Union, but they now have to pay €3,000-5000 per year. Finland is another country that is currently considering increasing the tuition fees of non-EU/EEA students.

International students help national economies, not just individual universities

International students are not only an important revenue stream for individual universities; they also help the economy at a more national level. A 2020/2021 study done by the London School of Economics, Universities UK International (UUKi), the Higher Education Policy Institute (HEPI) and Kaplan International Pathways found that international students contribute a net £37.4 billion to the British economy per year after the state's cost to host them has been deducted from the equation. International students spend money on accommodation, food, entertainment and transport, not just on their university. They also contribute to the economy by working in part-time jobs and during semester breaks.

A 2020 study by the Canadian government found the same pattern there. International students spend around CA$22 billion in the Canadian economy annually, including around CA$3 billion in direct and indirect tax revenues for the country. Canada has a significant labor shortage in nearly all industries, so international students are also important because they often become future expat workers.

Some smaller study destinations also need to attract international students to solve their labor shortage. Taiwan is an example. The Taiwanese government is investing NT$5.2 billion (around US$160 million) to attract over 300,000 international students by 2030, especially in the fields of finance and STEM, because there are fields in which the small island nation has a labor shortage.

International students often do postgraduate research in science and technology 

Beyond their economic contribution through tuition fees and general expenses, international students also indirectly drive economies by taking on research positions in universities and by founding companies. This is especially true in the STEM (science and technology) area. Universities and countries often don't have enough local students who choose these challenging and innovative courses, so they need international students to fill the gap.

The OECD Education at a Glance 2023 report shows that STEM courses are chosen by 32.2% of international students but only 24.2% of domestic students across OECD countries. Their representation is especially high at the postgraduate level – 24% of all international students in these countries are doing PhD degrees, and 14% are doing master's degrees. In the UK, for instance, nearly half of all PhD candidates are international students, with Chinese students being the majority (28% of all PhD students). Without these students, universities would struggle to find enough researchers and research assistants in science and technology, which greatly drive innovation and economic growth.

Case in point, in the US, one-quarter of all billion dollar startups were founded or co-founded by a former international student. The National Foundation for American Policy reports that these companies, which number close to 200, create nearly 900 new jobs every year. These are graduates, often of STEM or business programs, who stayed in the US on an employer-based visa after graduating.