Instead, the UK government must reconsider the amount of funding it has budgeted for research and development at universities in the country, the paper suggested.

“Universities roughly break even on teaching home students but make a big loss on research”

“If policymakers simultaneously wish to hold down – or reduce – tuition fees, oversee further improvements to the student experience and increase spending on research to levels that are unprecedented in recent times (to 2.4% of GDP), then they are likely to need to find considerably more than the £18 billion they have currently assigned,” the paper outlined.

“Universities roughly break even on teaching home students but make a big loss on research. They fill in part of that gap from the surplus on teaching international students,” Nick Hillman, HEPI director and the author of the report, said.

Were the government to introduce a fee cap of £7,500 for UK students as the Augar report recommended, universities face a “looming large loss”, he added.

“If that happens, they will have to use international student fees to subsidise home students and there will be less money for covering gaps in research funding,” Hillman warned.

According to HEPI, in 2017/18 around 272,000 non-EU students in England and Northern Ireland each paid £5,100 more than it cost to educate them.

Around £4,250 from each student went towards reducing the deficit on research. International fees also support some of the cost of teaching domestic students.

The report warned that there is a danger the UK university sector will become over-reliant on other countries at a time when there are already fears of over-exposure to fluctuations in geopolitics affecting how many students – especially students from China – wish to pay high fees to study in the UK.

If the government meets targets to increase education export earnings to £35 billion a year and host 600,000 international students by 2030, cross-subsidising research from international student fees may still be possible, it added.

However, the document highlights that previous targets on international students “have been missed”.

“Moreover, relying more on international student fees to bolster the teaching of home students will always make it harder to realise the R&D target than if all the available cross-subsidies were spent on research,” the report suggested.

If international fees are used to fill gaps in research and development funding caused by drops in domestic fees, the annual research deficit in England and Northern Ireland alone could rise to £4.9 billion from £3.7 billion, it added.

The paper comes a week after the Russell Group urged the government to “make a commitment to ring-fence sufficient funding” for future research projects.

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