A decline in the number of overseas students at universities in England has been highlighted as a major contributory factor after the sector's annual financial health check, published by higher education regulatory body the Office for Students, or OfS, showed a fall in income for the third year running.

Income from overseas students has become an increasingly vital financial lifeline in recent years, as domestic student fees have not kept up with inflation, but ever-tighter rules regarding visas and immigration have contributed to a tailing-off of numbers.

The downward financial trend has seen some institutions resort to closing courses or reducing the number of employees. Some have also spent less on infrastructure and sold off land and assets.

Philippa Pickford, director of regulation at the OfS, said the situation remained "stark" with increasing numbers of institutions expecting to be in deficit in the year ahead.

"The position is largely driven by a failure to recruit the anticipated levels of non-United Kingdom students," she said. "Recruitment levels for these students for 2024-25 are now projected to be about 21 percent lower than projected last year."

Umbrella group Universities UK called the report "deeply sobering" and Jo Grady, general secretary of the University and College Union, warned that drawing education into the political battleground around immigration policy could have devastating consequences.

"The Home Office must now think again and pull any further attacks on international students from its immigration white paper," she said. "If (the governing Labour Party) instead chooses to act like (right-wing anti-immigration party) Reform-lite and erect more barriers to those wanting to study here, there is a danger universities could go under."

The latest figures relate specifically to universities in England, rather than the whole of the UK, but data published by the House of Commons in September 2024 highlighted the changing face of international study across the UK.

In 2022-23, it said, there were 758,855 overseas students studying at UK universities, with more than 95,000 of them from the European Union. In total, overseas students made up 26 percent of the UK's student population.

In the five years from 2017 to 2022, the number of overseas entrants had almost doubled, with a radical change in applicant profile during that period, with the number from India multiplying 10-fold to make it the largest overseas cohort.

After a decade of being the biggest bloc, in the year 2020-21 entrants from China fell, with only a modest revival since then.

Figures published by the Home Office in March and quoted by the BBC show there was a 31 percent decline in UK sponsored study visas between 2023 and 2024, which was having an impact beyond the walls of academia.

Reduced numbers of overseas students have hit the economy in many towns and cities, with some landlords facing difficulties getting permission to convert empty purpose-built student accommodation for residential use.