UK Labour Government’s Proposed 6% Levy May Drive Away Int’l Talent

The debate around the Labour government’s proposed levy on international students has intensified as UK universities and student groups warn that the policy could drive away global talent, including Indian students in the UK, and cause significant financial strain on higher education institutions.

According to a recent report, Education Secretary Bridget Phillipson announced plans to impose a 6% levy on tuition fees paid by UK international students. The goal is to redirect the additional revenue toward maintenance grants for low-income British students. However, university bodies and student representatives believe the move could seriously harm the UK’s global reputation as a top destination for higher education.

What the 6% Levy Plan Proposes

• The levy would be introduced as a percentage charge (reportedly around 6%) on tuition fees paid by international students.
  
  
• Revenue from this levy would be earmarked for means-tested maintenance support for domestic students.
  
  
• The government’s reasoning: redirecting some of the funds generated by international enrolments to help struggling UK students. 

Warnings from Student Groups & Universities

Student groups and UK universities have expressed their concerns over the 6% levy proposal and are calling for a reassessment due to various reasons, including:

1. International Talent Might Turn Elsewhere

Amit Tiwari, President of INSA UK (Indian Students’ Association in UK), cautioned that a 6% levy could make studying in the UK unaffordable for many Indian students. He pointed out that in the year ending June 2025, 98,014 study visas were granted to Indian nationals, making India the second-largest sending country after China.

Tiwari argued that Indian students contributed more than £4 billion to the UK economy last year. The levy, he warned, could shift ambitions toward Canada, Australia, or the U.S. 

2. Loss of Revenue, Cuts to Courses

Research by consultancy Public First estimates that a 6% levy might lead to a reduction of 16,100 international students in the first year, resulting in a £240 million loss in tuition revenue. Over five years, the modelling predicts a drop of 77,000 students and revenue losses approaching £2.2 billion. 

Given that around 40% of UK universities already operate at a deficit, Jonathan Simons (a partner at Public First) cautioned that a levy could force job cuts, course reductions, or the closure of programmes. “The very students the government wishes to help might end up losing access,” he said. 

3. Threat to UK as a Global HE Destination

Student and university groups warn that the policy would erode the UK’s attractiveness as a destination for international students. The proposed levy is seen as undermining the UK’s competitive edge, potentially pushing students to more welcoming nations.

Further Impacts of Proposed 6% Levy on Int’l Students 

• The levy is framed as a redistribution measure, but critics argue it risks undermining the financial models that many universities depend upon, particularly those with large international student populations.
  
  
• The proposed charge could have a disproportionate impact on students from countries like India, where a relatively small increase in cost may tilt decisions toward alternate destinations.
  
  
• Universities already operating under tight budgets might face additional strain, especially those less able to absorb shocks.
  
  
• Course availability, especially in less commercial or niche disciplines, could decline if institutions scale back offerings to offset lost revenue.

What’s Next?

Universities and student organisations are calling for a rethink. They want greater consultation, impact assessments, and perhaps alternative ways of funding maintenance support without penalising international students.

Some possible compromises include:

• Phased introduction of the levy
  
  
• Exemptions for certain countries or student categories
  
  
• Stronger grant or scholarship programmes targeted to offset the burden
  
  

The stakes are high: for many institutions, international students help underwrite teaching, research, and cross-subsidised programmes. Losses of scale or confidence could ripple across the sector and impair the UK’s standing in global higher education.

The Bigger Picture

The UK’s higher education sector is heavily reliant on international enrolments to sustain academic operations. The ongoing debate around the UK international student levy highlights a deeper issue: how to fund universities without alienating the very students who help keep them afloat.

For Indian students weighing options for studying in the UK, the next few months will be crucial. The final decision on the levy could determine whether Britain remains a leading choice for international education or sees a shift in global student mobility toward other nations.