Graduate Route provides £70m boost to UK in year one

09 May 2024

New analysis shows that international students working in the UK under the Graduate Route after finishing their studies contributed a net benefit of £70 million to the UK in 2023/23. This comes at a time when the sector is urging for clarity on the scheme's future amidst the publication of a government-commissioned inquiry. This is according to the Exchequer benefits and costs associated with the Graduate Route visa report published this week by the Higher Education Policy Institute (HEPI), Kaplan International Pathways and the National Union of Students, undertaken by London Economics.

Launched in July 2021, the Graduate Route permits students to work in the UK for two years after graduation (three years for PhD students).

The authors of the report noted that in the 2022/23 tax year, there were approximately 66,410 holders of Graduate Route visas, including 54,460 international graduates and 9,950 dependents. This ratio is expected to decrease in the coming years due to the prohibition on master’s students bringing dependents starting from January 2024.

During 2022/23, it was estimated that Graduate Route visa holders contributed around £588 in tax revenue, equating to approximately £10,410 per main Graduate Route visa holder. Whilst over the same period, the cost to the Exchequer for providing public services to Graduate Route visa holders was estimated at £517 million, or £9,160 per main visa holder. This resulted in a net benefit of £70 million, or £1,240 per visa holder.

Additionally, breaking down different educational levels, the authors estimated that postgraduate students on Graduate Route visas had a net benefit of £4,440, while bachelor students had a net benefit of £1,740. Additionally, the net benefit per postgraduate (taught) student was £570.

Importance of the Graduate Route

The findings also reveal that the Graduate Route plays a crucial role in the UK's international student recruitment strategy and is a key factor that attracts students to choose the UK for their studies. Previous research by HEPI and London Economics showed that the 2020/21 cohort of international students is projected to contribute a net benefit of £37.4 billion to the UK by the time they graduate.

According to Nick Hillman, Director of the Higher Education Policy Institute: “The new research suggests the Graduate Route visa has had a positive but limited impact to date. Those former international students who have made use of the Graduate Route visa are contributing their skills to UK employers and more than paying their way financially. They pay more in taxes than they use in public services.

“If the Graduate Route visa remains in its current guise, as I fervently hope, then the financial and productivity benefits will multiply in the years ahead. If on the other hand, the Graduate Route visa is severely restricted or even abolished, as has been rumoured, then fewer international students will come to the UK in the first place, damaging our universities, our economy and our soft power,” he added.

The benefits to the Exchequer in the analysis encompassed income tax, employee and employer national insurance contributions, VAT on goods and services consumed, visa application fees, and Immigration Health Surcharge payments. Meanwhile, estimated costs included healthcare, housing, community amenities, and education received by dependent children.