A top university representative has said that the Scottish Government needs to pay more for each Scottish student’s place at university to help stabilise the sector.

But even increasing funding for Scottish-domiciled students likely wouldn’t be enough to end universities’ “reliance” on international student tuition, Universities Scotland convener Professor Iain Gillespie told MSPs on Wednesday morning.

During an evidence session for the Education, Children and Young People’s Committee, Prof Gillespie, who is also vice-chancellor at the University of Dundee outlined the financial challenges that Scotland’s universities are facing.

MSPs asked Prof Gillespie how international students contribute to university funding and whether funding from international student fees helps to support Scottish student tuition.

It’s no secret that international fees cross-subsidise Scottish student placements, Prof Gillespie said. In fact, the university financial system is largely built around that assumption, he said.

“That’s been the case for quite some time, and our funding model is predicated on that. Recently, in the last year, we’ve seen some movements around that.

“Scottish students cost money, and we need to subsidise Scottish students through the funding model.”

He added that cuts to the university sector’s budget, including the most recent decline by 2.7% (£32.3 million) in cash terms, has meant that universities are struggling to stretch existing fees further.

Research “isn’t getting any cheaper,” he said, and cost pressures are at risk of making Scottish universities less competitive compared to English neighbours in the research market.

Earlier this week, Sir Paul Grice, vice-chancellor at Queen Margaret University (QMU) and vice convener for Universities Scotland, said that he supports a review of the free tuition model in Scotland in favour of creating a “compromise” system that will allow the sector to be more financially sustainable.

“[University is] not really free, somebody has to pay for it,” Sir Paul told the Scotsman, referencing Scottish Government funding for Scottish students.

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“And the problem at the moment is that over the last decade, government has just not been able to meet its part of the deal.”

When asked what he would see as the government “meeting its end of the deal,” Prof Gillespie said, simply, universities would like to see more money coming in for each domestic student.

“We are far away, far away from paying the costs of tuition through government funding for Scottish-domiciled students.

“Would that remove the requirement to rely on international students? It would neither remove requirements nor would it remove the desirability. Because international student income cross-subsidises the provision of tuition for Scottish [domiciled] students, and it also subsidises research.

“So, if we want to see our universities drive research and drive the economy, then at the moment – because of the structure of underfunding of research in the UK, and particularly in Scotland – we remain reliant on international students.”

(Image: Scottish Parliament TV)

He said that more urgently, recent changes in the international student population are putting some universities in dire straits.

“Most urgently, for us, the international student market has declined very significantly. It’s an average decline of about 20% depending on how you measure it.

“For some institutions, that decline is as much as 75%. That has made a huge impact on the income to Scottish universities.

“This puts really significant pressures on maintaining high quality education.

“Institutions are taking mitigating actions to continue to be able to function. We are well-run institutions, so I personally don’t see that there is a risk to the viability of universities going forward.

“But there is a clear and present increasing risk to equality and scope of provision.”

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He called for more predictability, transparency, and flexibility from the government and SFC regarding allocations of places for domestic students and funding levels.

In particular, he said that it is difficult for universities to adapt to policy changes such as the government's decision to remove some funding for placements this year, if they are not given enough warning.

Universities Scotland has said that the 20% downturn last year amounts to roughly £100 million and could reach 27% next year.

So why are international student numbers down? This was one of the questions put to Prof Gillespie by MSP Ben Macpherson. Prof Gillespie outlined three basic reasons:

  • Changes to dependent visa policies, which Prof Gillespie said has particularly impacted incoming student from Africa and South Asia
  • Proposed changes to post-study work visas
  • Global shocks causing uncertainty in other parts of the world

Prof Gillespie said that roughly 70% of international students cite the post-study work visa as an attractive element of studying in the UK. Proposed restrictions to those opportunities, including raising the minimum salary requirements could be turning students away.

These changes in international student intake will impact some universities more than others.

Professor Hari Hundal, assistant Vice-Principal for Equality, diversity and inclusion at the University of Dundee, said that international students represent 30% of university income, on average.

At Dundee, he said that international student fees in 2023 provided £78 million (24% of university income) and represented “a critical income stream given that funding for domestic students and research does not cover the cost of delivery.”

When asked about suggested changes to the free tuition model and increases to the funding for Scottish-domiciled students, a Scottish Government spokesperson said that the government remains fully committed to the free tuition policy.

“The latest data shows since this policy was put in place, the number of Scottish students entering full-time first degree courses at university has increased by 31%, with record numbers of students from our poorest communities as a result of the Scottish Government’s commitment to Widening Access to university.

“Our universities play a pivotal role in Scotland’s economy and society – and despite facing the most challenging budget since devolution, the Scottish Government will invest over £1 billion on teaching and research, including an increase in funding for research and innovation.”