Average fees for overseas undergraduates studying classroom-based subjects at UK universities have broken the ?10,000 barrier for the first time, prompting warnings that the country could be risking its position in the lucrative market for international students.

New figures for 2010-11 suggest that institutions will charge undergraduates from outside the European Union an average of ?10,463 a year in classroom-based subjects, up 5.6 per cent on 2009-10. That rises to ?11,435 for overseas undergraduates in laboratory-based subjects, an increase of 6.1 per cent.

Inflation in the UK as measured by the consumer prices index stood at 3.2 per cent in June.

There were similar rises in fees for overseas postgraduates on one-year taught master's courses, where the average is ?10,938 in classroom-based subjects (up 5.2 per cent) and ?12,487 in lab-based subjects (up 6.1 per cent).

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Imperial College London charges the most: its overseas undergraduates face annual fees of up to ?26,250 in lab-based subjects.

The fees data are gathered annually via a survey of institutions by Mike Reddin, a former London School of Economics academic.

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The release of the figures prompted warnings that universities must judge carefully the point at which higher fees may act as a deterrent in a competitive international market.

Institutions are not subject to a cap on the fees they charge to overseas students of all levels, or to domestic and EU postgraduates, all of whom represent increasingly important sources of income.

The average fee for UK students on one-year taught master's courses rose to ?5,214, up 16 per cent on the previous year. However, Mr Reddin said that some of this rise can be attributed to a change in the way the figures are recorded.

The key comparison when considering overseas undergraduate fees is with the home undergraduate rate. Fees paid by home and EU undergraduates are capped at ?3,290 for 2010-11.

Subsidies from the Higher Education Funding Council for England bring the total money received by universities to about ?6,290 for each home/EU student in classroom-based subjects and about ?9,290 in lab-based courses.

Dominic Scott, chief executive of the UK Council for International Student Affairs, said the increase in fees was a "bitter pill" for foreign students to swallow.

"With all the press coverage of cuts to higher education budgets in the overseas press, there is real concern at whether the UK will be able to continue to offer the best value for money compared with competitor countries," he said.

He added that "with these sort of increases, institutions are going to have to invest even more (in improving the student experience) to continue to attract good numbers".

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Bahram Bekhradnia, director of the Higher Education Policy Institute, said it was "interesting that home fees (for postgraduates) have ... risen more than those for overseas students".

He said that international numbers had continued to grow despite rising costs, but added that "there must come a point at which our prices start to be a deterrent".

Fees for overseas students at Imperial are similar to those at top US universities. Harvard University typically charges overseas students about ?22,500, and the Massachusetts Institute of Technology charges about ?25,000.

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But prices are far lower in continental Europe, where opposition to tuition fees remains fierce. Overseas students are charged about ?250 a year at the Ecole Normale Superieure de Lyon and nothing at the Free University of Berlin. Countries such as Finland and Sweden have in the past not charged overseas students, however this is set to change.

There is a limit

Nicola Dandridge, chief executive of Universities UK, insisted that the UK "clearly remains competitive" internationally, with the number of students from outside the EU rising by 9.4 per cent to 251,310 last year.

However, Sir Drummond Bone, former vice-chancellor of the University of Liverpool, suggested that demand was being propped up by other factors. "The real comparison is not just fees but total living costs. At the moment the low value of the pound is helping, but not as much as it did even last year."

Don Olcott, chief executive of the Observatory on Borderless Higher Education, said overseas students felt that the reputation of UK higher education gave added value, which allowed universities "greater flexibility for pushing the upper boundaries of tuition fees".

But he warned: "Does this mean there is no reasonable upper limit on fees? No. Today, students have more choices from more providers than at any time in history."

Dr Olcott added that a key issue was what would happen if the gap between fee levels at top-tier and less prestigious institutions grew.

This could lead overseas students to give more weight to factors such as employment opportunities and the student experience, and shun high-cost universities.

For 2010-11, the Russell Group of large research-intensive universities will charge average fees of ?12,162 for overseas undergraduates in classroom-based subjects and ?14,987 in lab-based subjects. Averages for the 1994 Group of smaller research-intensive universities are ?10,678 and ?13,012: for the Million+ group of post-1992 universities, they are ?9,059 and ?9,489.

Average postgraduate fees for home students are higher at Scottish universities (?5,123) than English ones (?4,989).

Universities were criticised in light of the data. Aaron Porter, president of the National Union of Students, said: "Institutions are able to raise postgraduate fees without restriction and they are clearly using that freedom to ask postgraduates to fill gaps in their funding left by ... cuts."

Mr Reddin began collating the figures in 2002 in response to a "growing disparity between fees for home/EU and overseas students". He also wanted to see if universities were "admitting international students who they wouldn't normally admit were it not for the fact that they come with this exciting price premium".

Mr Reddin pointed out that the figures do not show how many students take up courses under the rates quoted. They provide evidence of what universities believe to be the market rate, but not of how many students accept it.

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