The Migration Advisory Committee's Report on the Graduate Route: An Update on The Rapid Review

Introduction

On 4 December 2023 the UK Home Secretary, James Cleverly, announced future changes to visa rules in what he described as a “five-point plan” to reduce immigration. Since then, a few changes have been made to legal migration in the UK among which is the increase of the baseline minimum salary to be sponsored for a Skilled Worker visa from £26,200 to £38,700, while the ‘going rate’ minimum salary specific to each job has also gone up significantly. New entrants to the UK job market like students and graduates are however exempt from this rule and can read more in our blog post here.

Just as well, from January 2024, students on taught Masters’ programs have not been allowed to bring dependants on the student visa and they will subsequently not be allowed to have dependants on the Graduate route. In effect this is also a restriction to the Graduate route. On 11 March 2024, the Home Secretary commissioned the Migration Advisory Committee (MAC) to carry out a rapid review of the Graduate route. In this blog post, we cover the key findings and recommendations of the MAC's report.

Objectives of the Graduate Route

The MAC began their review by considering the objectives of the graduate route. The primary objectives of the Graduate Route, as outlined by the Home Office, are to:

1. Enhance the UK's offer to international students, ensuring it remains a competitive destination for higher education.
2. Enable the retention of skilled graduates, thereby contributing to the UK economy.
3. Support the UK government's ambition to increase the number of international students and boost the value of education exports.

To read more on the graduate route read the Government's impact assessment here or visit the information page of the graduate route here.

Key Findings of the MAC Report

 The MAC were asked us to provide evidence in answer to 5 questions:

 1. Any evidence of abuse of the route including the route not being fit for purpose;
2. Who is using the route and from what universities they graduated;
3. Demographics and trends for students accessing a study visa and subsequently accessing the UK labour
market by means of the Graduate route;
4. What individuals do during and after their time on the Graduate route and whether students who
progress to the Graduate route are contributing to the economy; and,
5. Analysis of whether the Graduate route is undermining the integrity and quality of the UK Higher
Education system.

The key findings of the report are reprised below.

Who Uses the Graduate Route?

The MAC found that since its introduction in July 2021, the graduate route has seen significant uptake. By 2023, approximately 144,000 Graduate visas were granted, with 114,000 for main applicants and 30,000 for dependants. They also found that the route is predominantly used by graduates from India, Nigeria, China, and Pakistan, with India alone accounting for over 40%. The majority of these graduates completed postgraduate taught courses, particularly from non-Russell Group universities which account for 66% of all main applicant Graduate visas.

The MAC note that the recent change on dependants on the Student route is in effect a change of the policy on the graduate route. Recent statistics by the Home Office shows that applications for main applicants on the Student visa have fallen by 15% to 34,000 visas when comparing Q1 2024 with Q1 2023, whilst dependant applications fell by 80% to 6,700 visas. This suggests the dependant rule change is already having an effect and this effect can affect the UK's graduate numbers.

Employment Outcomes

Understanding what individuals on the graduate route do whilst on the route was an important consideration in determining the overall impact of the route. An initial conclusion by the MAC reveals that for graduates who work while on the route, the majority secure employment promptly and work for most of their first year. Moreover, they found that the monthly income of an individual is likely to be higher the further they have progressed into the graduate route. The review also found that 19% of graduate visa holders earn at least £2,500 in their first full month after obtaining the visa. This increases to 38% by the 12th month. This is close to the £2,580 monthly (or £30,960 annually) salary threshold for a Skilled Worker visa with the new entrant discount applied, although the occupation-specific rate for a Skilled Worker visa may be higher than this.

The review further revealed that the average monthly income during the first year on the graduate route of the matched cohort who are in work is £1,750 (equivalent to £21,000 annually) while the average monthly income, when looking at only the last 3 months of the first year on the graduate route, is £2,020 (equivalent to £24,240 annually). These figures are higher than the Home Office assumed for those on the route in the Graduate route impact assessment, which assumed a median salary of £18,000 using ASHE (Annual Survey of Hours and Earnings) 2019 data. They are also higher than the ASHE 2022 median earnings for all workers between the age of 22 to 26 which is £19,200 annually. For domestic graduates, the corresponding estimate is £26,000 at 15 months after graduation, from the Graduate Outcomes Survey (UK domicile 1st degree in 2020/21).

The report notes that the graduate visa holders interviewed expressed that they were not in jobs which related to their course of study, preferred longer term career trajectory, or in jobs they wanted to be in. They were in job roles, or were having to apply for job opportunities, for which they were overqualified. A lack of awareness of the Graduate route amongst employers was reported as a barrier to those on the route seeking employment. This was a finding in the report by the All-Party Parliamentary Group for International Students (APPG) and was also reported to us by student representative groups, who said students and those on the route were having to explain conditions of the route to employers themselves.

The review further noted that there may be some reluctance by employers to take on graduate route users, who may not remain in the UK after their visa period. Employers may prefer to take on someone for a longer period. For employers there may also be the consideration that salary thresholds on the skilled worker visa have recently risen to £30,960 (with the new entrant discount applied). This may deter employers from employing newly qualified Graduate visa holders for fear they may not reach the Skilled Worker threshold by the end of their graduate visa.

Overall, about 50 of matched cohort switched into a work visa or student visa, either prior to or when their graduate visa expired. Most of these (86%) went into the skilled worker route, whilst 1% went to other worker visas, and 13% went back to Student Visas. Of those who switch into study or work routes (50%), the majority switch towards the end of the visa. This suggests graduates may find it difficult to switch onto a sponsored route until the end of their current visa. Employers may also be reluctant to sponsor graduates before their visa expiry, given the costs and administration involved. Nevertheless, the findings broadly suggest that graduate visa holders who are working earn a similar amount to domestic graduates, and their earnings typical increase with time on the route.

Financial and Sectoral Impacts

The review shows the graduate Route has a mixed impact on the UK's higher education sector. On one hand, it supports the financial stability of universities, especially given the reliance on international student fees to subsidise domestic education and research. On the other hand, there are concerns about the long-term sustainability of this funding model, especially if further restrictions are placed on the route.

As shown in the image extract from the report above, average fees paid by international students are highest for higher globally rankedinstitutions. In the academic year 2021-22, international students studying at UK universities in the top 100 ranked universities paid £21,490 and £24,040 in average annual fees for undergraduate and postgraduate (taught) study respectively compared to the £9,250 maximum for domestic undergraduate fees. However, international fees are just one part of total income. Total income is made up of many streams including teaching and research grants, donations, and investment income. The review shows that international fees account for 22% of total income for those ranked in the top 100 and slightly higher at 23% of total income for universities ranking in the 1000+ ballpark.

Whilst the government can change policy objectives for the Graduate route, the insights and the broader analysis presented in the report suggest that there would be a risk that restrictive changes to the route in the immediate term could detract from its effectiveness in achieving the government’s original objective to “maintain and improve the UK’s standing as a world-leading provider of international higher education”. Indeed, it could see universities stripping back wider activities like support for businesses and focusing only on student education as many UK universities face financial pressures due to underfunding in domestic education and research sectors. Given that there is a global market for higher education and prospective international students consider a range of factors in deciding where to study including graduate routes after studies, the review highlights that further restrictive policy changes will directly impact the number of international students who come to the UK.

Abuse and Misuse

The MAC report found no significant evidence of abuse of the graduate route, defined as deliberate non-compliance with immigration rules. The report concludes that the majority of users comply with the immigration rules, and the route effectively serves its purpose of retaining international graduates in the UK.

However, concerns were raised about the use of recruitment agents by universities, with instances of misleading information being provided to prospective students. The report suggests that mandatory transparency and better regulation of recruitment practices could mitigate these issues.

Conclusion

The MAC's rapid review highlights the importance of the graduate route in maintaining the UK's competitive edge in higher education and supporting economic growth through the retention of international talent. Their  recommendations include a call for greater collaboration between the government and the higher education sector to better integrate international graduates into the UK labour market. The government have also been charged to monitor the impact of recent policy changes, such as the restriction on dependants, to understand their effects on international student numbers and the subsequent use of the Graduate Route. The need for a comprehensive review of the higher education funding model to reduce overreliance on international student fees was also strongly canvassed.

Overall, in the words of the MAC,

"After reviewing the evidence, our conclusion is clear. The graduate route has broadly achieved, and continues
to achieve, the objectives set by this government. We therefore recommend that the route remains in place
in its current form."

To read the full repot, click here.