A questionable strategy for increasing university revenues

This week's Sunday Times of London had an interesting article about a movement on the part of some British universities to increase revenues by accepting more overseas students. "Overseas" in the British universities means non-European Union students, as EU students get treated the same as British students for tuition and tuition loan purposes. Thus, increasing the proportion of overseas students at the expense of British students is a way to increase revenues. The suggestion came from the incoming chairman of the Russell Group, roughly equivalent to the Association of American Universities here in the U.S.

This strategy is akin to those U.S. public universities which increase the proportion of out-of-state students, who generally pay much higher tuition rates than resident students. For example, out-of-state freshmen students entering Penn State's flagship campus at University Park this year pay 85% higher tuition than Pennsylvania residents ($25,134 vs. $13,604, and this doesn't include mandatory fees, which are the same for resident and non-resident students). Many U.S. universities try to keep it quiet if they increase the proportion of out-of-state students, as they don't want to send a signal that they're favoring these students at the expense of residents (whose families subsidize the tuition rate through the state appropriation received by public universities). Some states cap the proportion of students who can come from out-of-state, but many provide leeway to the public universities to decide for themselves.

What is particularly interesting about the British situation is that the universities are apparently being very upfront about their decision, and appear to be unafraid of any backlash from either the government or the public. They've used the rationale that they will likely be facing large cuts (up to 25%) in the general support they receive from the government. That leaves them with few options other than to admit more overseas students, who at most universities pay at least three times the current tuition of £3,225 paid by British students. It will be interesting to see whether the Russell Group universities will move forward with this plan.