Jonathan Portes argues that concerns about the graduate visa are based on misconceptions

Suppose we could somehow, at absolutely no cost to taxpayers, boost the earnings of those who graduate from UK universities for the first two years after they finish their studies. What would the impact be?

It would certainly increase the financial incentive to do a degree—especially for lower-income students who face affordability constraints or are worried about the future burden of loan repayments. We would almost certainly expect the economic impacts to be positive in both the short and the long run—for the students, for the university sector, and for the wider economy.

Sadly, no such free lunch exists for domestic students. But this is precisely what the graduate visa does for foreign students. By allowing them to work in the UK for two years after graduation, it boosts their post-university earnings. It thereby both increases the financial incentive for an international student to come to the UK and expands the number of international students able to come by easing credit constraints—particularly important since many international students finance themselves by loans, either commercial or from family members. Why, then, has the government decided that the graduate visa is being “abused”?

Questions of quality

The letter from home secretary James Cleverly commissioning the review refers to the Migration Advisory Committee’s 2018 comment that “granting an unrestricted right to work in the UK for international students could create additional demand for degrees, particularly short master’s degrees, driven by the opportunity to obtain a job and remain in the UK rather than for the value of the qualification”. 

This is at best confused. There is no doubt the graduate visa increases demand for UK university places. This will increase the number of places available as universities respond to the demand. The new courses and places added may be different (in quality or subject areas) to those previously offered, and this could indeed lead to new lower “quality” courses that now offer, as well as educational benefits, the opportunity to work in the UK afterwards. But, at the same time, it will bring students who could always have benefited from a UK degree but previously could not afford to come.

For existing courses, where applications are reasonably competitive, the main impact is likely to be to drive up the number—and possibly the quality—of applicants.

Back door

Perhaps an even more important point underlying politicians’ concerns is the idea that the graduate visa is somehow a “back door” to the UK labour market, and indeed eventually to settlement and citizenship. This is something that has preoccupied the former health minister Neil O’Brien.

The problem with this argument is that it completely misunderstands how the migration system—and in particular the skilled work visa system—actually operates. It is indeed possible for someone to come to the UK, study, graduate, work in any job for two years on a graduate visa, move on to a skilled work visa, and ultimately gain the right to settle permanently.

But anyone who wanted to do this could short-circuit this lengthy—and expensive—process by simply applying for a skilled work visa in the first place. The rules would be the same whether or not they were in the UK already. If you apply for a care visa, there are effectively no skill requirements and no salary threshold; anyone can qualify.

So it would make no sense at all for someone to come to the UK to study just to get access to the UK labour market. There is nothing to stop them, like tens of thousands of others—often from the same countries of origin—applying directly for a visa to work in social care. The fact that they are voluntarily choosing to do a degree first (and paying for it) suggests they regard the degree as worthwhile in itself.

So all the graduate visa really means is that some students who want to come to the UK to do a degree are now willing and able to do so, and after graduating can work here for two years. Undoubtedly, many of them, during this period, work in jobs that are relatively low-skilled or low-paid, as indeed do many UK-origin students. But so what? The vast majority will be making a positive economic and fiscal contribution, just like young UK-origin workers, and after those two years they will either leave or move on to a skilled work visa, on the same basis as any new arrival.

Overall, then, concerns about the impact of the graduate visa, either on universities or, more importantly, on the broader labour market, seem to be based on misconceptions. Major changes would have more costs than benefits.

Jonathan Portes is professor of economics and public policy, King’s College London