Budget 2025: What the new International Student Levy means for fees and scholarships
On Wednesday 26 November 2025, the UK Government confirmed in the Autumn Budget a new international student levy that will reshape the higher education landscape.
The levy will charge universities £925 per international student per year of study from August 2028. Exemptions apply for smaller providers, with no charge for the first 220 international students annually. The Treasury has stated that all income raised will be reinvested into higher education and skills, including funding maintenance grants for disadvantaged students studying priority courses.
Background: Why a levy on international students?
International students contribute billions to the UK economy each year through tuition fees, living expenses, and cultural exchange. However, recent debates have focused on whether universities should rely so heavily on overseas enrolments to balance their finances.
The idea of an international student levy has been debated for years. Policymakers argued it could help fund public services and support domestic students, while universities warned it might undermine the UK’s global competitiveness.
The government had previously suggested a percentage‑based charge, but opted for a flat fee. This approach is thought to favour elite institutions such as those in the Russell Group, who typically charge higher tuition fees, while placing greater strain on universities with lower fee structures.
What does a levy on international students mean for tuition fees?
The impact of the levy will vary depending on the institution and course:
Tuition fees: Universities may pass on the levy cost through higher tuition fees for international students.
Scholarships: Institutions could adjust scholarship budgets to offset the levy, potentially reducing the number or value of awards available.
Living costs: If the levy indirectly increases overall study costs, students may need to budget more carefully for accommodation and daily expenses.
Competitiveness: The UK competes with countries like Canada, Australia, and the US for international talent. A levy could influence student choice if it makes the UK less affordable.
The Treasury has said the rate will be kept under review, with future decisions on how proceeds are deployed set out at the next spending review.
Scholarships and financial aid: A changing landscape
Scholarships have long been a lifeline for international students, helping offset the high cost of studying in the UK. The levy could reshape this landscape in several ways:
Reduced scholarship budgets: Universities may divert funds to cover levy costs.
Targeted scholarships: More awards could be focused on priority subjects or regions.
Government-backed schemes: There may be new initiatives to soften the impact for students from lower-income backgrounds.
Universities are already seeking innovative ways to respond to financial challenges. For example, Manchester Metropolitan University and the University of Manchester recently announced a joint alumni discount scheme. From September 2026, graduates from either institution will receive a 10% discount on postgraduate courses at the other.
Other implications of the levy for international students
Beyond fees and scholarships, the levy could influence:
Visa applications: Higher costs may deter some students from applying.
University diversity: Institutions may see shifts in enrolment patterns, with fewer students from certain regions.
Global competitiveness: The UK risks losing ground to countries like Canada, Australia, and the US, which are actively expanding international student recruitment.
Scholarship Scanner’s take
While the levy is framed as a way to rebalance higher education funding, its real-world impact will depend on how universities implement it. For international students, the key questions are:
How much more will international students pay in UK university tuition fees?
Will UK universities still provide scholarships for international students?
Should international students consider alternative study destinations?
Final thoughts
The Budget announcement marks a turning point in UK higher education policy. International students should stay informed, explore scholarship opportunities early, and factor potential fee changes into their study plans.
Scholarship Scanner will continue to monitor developments and provide updates as universities respond to the levy.