UK visa changes set to cut university income, Home Office warns

The Home Office’s latest analysis warns that recent UK visa changes will cost universities up to £4.4 billion over five years, with lost international tuition fees driving most of the hit. The government has shortened the Graduate Route post-study work visa from two years to 18 months, added a 6% international student levy on tuition fees, and raised the financial requirements for Student visa applicants. Officials say the measures aim to rebalance migration flows and costs, but sector leaders fear a sharp fall in overseas demand and a squeeze on university budgets already under strain.

Timeline of policy changes and implementation

Ministers set the direction in 2025, confirming the Graduate Route shift and finalising the levy framework in late 2025. Policy rollout has occurred in stages:

• The 18‑month Graduate Route limit applies to most graduates from 1 January 2027, cutting six months from the previous two‑year allowance.
• The 6% international student levy applies to tuition fees and is designed to raise funds tied to costs and services associated with incoming students.
• From 11 November 2025, Student visa applicants must show higher maintenance funds: £1,171 per month outside London (up from £1,136).

These measures reduce the post‑study working window, increase upfront cash requirements, and add direct costs to tuition fees — all factors that affect competitiveness and recruitment.

Financial thresholds and immediate impacts

• Maintenance funds: Applicants must now demonstrate £1,171 per month outside London, increasing the upfront cash students need before securing a place.
• Student levy: A 6% levy on international tuition fees raises costs for overseas students and pressures university pricing strategies.

Universities warn this will hit applicants from lower‑income backgrounds and countries with weaker exchange rates hardest, since the required cash is planned on an annual basis.

Home Office economic impact assessment

The Home Office ties the measures together and projects combined fallout:

• Total losses could reach £4.4 billion within five years.
• Universities bear the bulk of the downside because tuition fees are the single largest line item at risk.
• Drivers of the shortfall include:
  • Fewer new arrivals
  • Shorter post‑study employment periods (fewer conversions to work routes)
  • Price sensitivities caused by the international student levy

“The 18‑month Graduate Route, higher maintenance thresholds, and the international student levy are likely to push decisions toward rival countries,” say sector leaders, who argue each factor compounds the others.

Effects on applications and institutional risk

Applications were already falling. Between 2023 and 2024, international student visa applications dropped by an estimated 17% to 19%. Contributing factors include the new rules and tighter dependant allowances for most taught postgraduate routes.

Impact is uneven:

• Selective institutions with strong brands can sustain demand longer.
• Mid‑tier and smaller providers with high exposure to international enrolments face sharper risk.

According to VisaVerge.com, many institutions are revamping recruitment plans, overhauling compliance systems, and reworking financial forecasts to handle the expected revenue drop and protect core teaching and research.

Admissions conversations and employer concerns

Inside admissions teams, conversations with prospective students have shifted:

• Students now ask pointed questions about post‑study work timeframes, costs, and the likelihood of switching to work routes within the shorter period.
• The Graduate Route’s reduction from two years to 18 months trims a quarter of the previously available time, a meaningful loss for fields with longer hiring cycles (e.g., finance, tech graduate schemes).
• Corporate partners are asking whether the tighter timelines will affect graduate availability for internships that lead to permanent roles.

Universities report advisers and students pressing for written assurances on internship access and employer sponsorship pathways.

Sector response and mitigation strategies

Universities are taking several actions to blunt the impact:

• Increasing scholarships targeted at key markets to offset the levy.
• Exploring new partnerships and pathway programmes.
• Strengthening career services to help graduates secure skilled roles more quickly.
• Reallocating marketing spend toward countries less sensitive to the changes.

Financial teams are building scenarios that include:

1. Lower first‑year intakes
2. Reduced progression to later years among self‑funded students
3. Flatter postgraduate enrolments

Many leaders say there is limited room to raise domestic fees without damaging price‑sensitive demand, so recruitment may become more aggressive within a potentially smaller pool.

Regional and local economic effects

The Home Office projects the £4.4 billion figure covers lost revenue across several areas:

• Tuition fees
• Accommodation income
• Related local spending by students

Regional campuses are particularly vulnerable because international student spending often supports part‑time jobs and local services. Some leaders warn of potential course closures, hiring freezes, or deferred capital projects if recruitment falls faster than expected.

Guidance for students and official resources

For students weighing offers, official guidance is a central source of information. The government provides details on eligibility, permitted stay length, and activities under the Graduate visa:

• See the official information at the Home Office: https://www.gov.uk/graduate-visa

Universities and agents are directing applicants to that page while adjusting marketing and fee structures to reflect the levy and higher maintenance thresholds.

Key takeaways and outlook

• The UK’s new policy mix — 18 months post‑study work time, £1,171 per month maintenance outside London, and a 6% international student levy — reshapes the UK offer to international students.
• The Home Office forecasts a potential £4.4 billion shortfall over five years, mostly from lost tuition revenue.
• The next two admissions cycles will test whether universities can absorb the shock. If the projection holds, institutions may face hard choices on courses, staffing, and capital investment.
• Universities are adapting quickly, but sector leaders warn the full financial pressure is only beginning to show.