International markets are highly volatile and the risks of UK higher education institutions being increasingly reliant on the revenues from international students, has been well publicized in recent months.

Analysis of the default rates reported by institutions in this inaugural Income Collection Benchmarking survey, for the 22/23 academic year, indicates that UK universities could also be risking as much as £500m each year in late revenue. This suggests that some institutions are struggling to manage that volatility and risk, putting the sector under even more financial pressure. The success, or not, of clawing back overdue fees is heavily dependent on the income collection policies an institution has in place, and how agile their processes and systems can be when faced with unexpected challenges that might arise within the academic year.

Findings from the survey indicate that balance is key. The data suggests that leveraging application fees and higher deposit rates can help to ensure applicant commitment and mitigate financial risk. Whilst offering flexible instalment plans that students commit to before enrolment confirmation can also help to reduce default rates. Institutions with lower default rates also provided a wide range of financial support services, with pastoral care proving particularly effective, before deploying sanctions. Key to enforcing sanctions appears to be not to make it too easy or too difficult, with high default rate institutions being more likely to operate in those two extremes. Sanctions are an important tool to be leveraged, but care and consistency is critical.

An area of diverging policy and potential risk is when an international student recruited by an education agent becomes commissionable. Institutions paying commission after enrolment but with no payment commitment, could find themselves with additional costs and loss of income. Likewise, a lack of controls to mitigate both agent, immigration & financial crime risk, could also result in loss of income and more serious consequences for both student and institution.

Many of the challenges the UK higher education sector is facing are outside of their control. But working collaboratively across recruitment, admissions and finance teams, to deploy joined up policies in order to attract, engage and secure good quality students, will go a long way to managing risk, ensuring stable finances and providing students with the best possible experience.