Universities ‘driven’ to international student reliance – education body chief

The deputy director of a higher education representation body has said changes to visa regulations have “highlighted the problems” in Scotland’s cross-subsidy university model.

Lesley Jackson, deputy director at Universities Scotland, addressed her concerns for university funding at a Finance and Public Administration Committee at the Scottish Parliament on Tuesday.

The committee’s aim is to hear from various sectors and their concerns as part of a pre-budget scrutiny for 2026-27, and this particular meeting was on how the government can respond to long-term fiscal pressures.

Ms Jackson said universities were “driven” to relying on international student fees in Scotland due to a cross-subsidy model that has seen a decline in international applicants and funds due to visa restrictions.

She said: “Cross-subsidy is built into the model. Universities lose money teaching Scottish domicile students and lose money doing research, there are obviously marginal sources, conferencing etc, but the main source of that cross-subsidy is that international student fees. Universities were driven in that direction by the model.”

She said: “I certainly would agree there has been a really dramatic change in that space because of the changes in the immigration regime and that’s just highlighted the problems with that cross-subsidy model.

“I don’t think it’s something universities wanted to do in and of itself it was in order to pay for everything else that they were doing, and we’re now having to have a conversation about what we can continue to afford doing if that key source of cross-subsidy income suddenly declines.”

She said that the university sector needed more long-term funding rather than short-term funding as “more than 85% of new jobs” are predicted to be at graduate level in Scotland by 2035.

Ms Jackson said: “It makes it really difficult to for universities to plan and recruit effectively onto courses. We know that more than 85% of new jobs in Scotland by 2035 will be at graduate level but we also know that the population of 18-year-olds is going to start to decline beyond 2030.”

Scotland’s universities are facing financial challenges which has led to job losses across the sector.

Dundee University is cutting around 300 full-time jobs as it aims to address a £35 million deficit, and the University of Edinburgh is looking to make £140 million of cuts over the next 18 months.

The committee discussed what would potentially be needed to achieve a new funding model that would sustain the sector better.

Ms Jackson said: “We need a cross-party discussion about what we want from universities going forward and how we are going to pay for that.

“We’re all agreed, including universities, that what we are going to be delivering going forward to meet the needs of the economy and Scottish society is not necessarily what we’ve been delivering or certainly not in the way that we’ve been delivering it in recent decades.”

Ms Jackson said the value of funding had decreased due to inflation and other strains in the past few years.

She said: “The value of that funding has really fallen away in recent years through inflation, employer national insurance increases and post Covid costs, etc. It’s just energy bills, it’s relentless.”

The committee will take evidence on its pre-budget 2026-27 scrutiny from the Cabinet Secretary for Finance and Local Government at its next meeting and is expected to report on its findings in October 2025.

Higher Education Secretary Graeme Dey said: “We are actively engaging with the higher education sector on the future funding model of universities, but we are clear that this Government will not reintroduce tuition fees.

“Access to higher education must be based on the ability to learn, not the ability to pay. This would remain the case in an independent Scotland, where we would also continue to welcome students from the EU.

“The Scottish Government recognises the vital role universities play in Scotland’s economy and wider society, which is why we are investing over £1.1 billion in the sector this year alone.”

The UK Government has been approached for comment.