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EMO OF FRIESLAND was Oxford's first recorded foreign student, and since 1190 they have kept pouring in. Both sides have benefited: Britain's universities, economy and culture have been enriched, and foreign scholars have been privileged to mix with the best. In recent years foreigners' higher fees have helped to keep increasingly hard-pressed institutions solvent.

Now, as rich-world students become more adventurous, and prosperous emerging countries churn out would-be undergraduates faster than good university places, the market in international higher education is booming. The number of students enrolled outside their home country has roughly trebled since 1980, on OECD figures. Britain is a world leader in this market, second only to America.

But the business is changing. In addition to the traditional Anglophone competitors for foreign students, many continental European places now teach in English. Countries that once consumed international education now provide it: Singapore is well on its way to becoming a regional hub. Universities (including British ones) are setting up campuses across borders. In short, students have more choice than ever; they are less likely to tolerate being fee fodder to subsidise Britons' education just because a brochure boasts an ancient-looking crest.

To flourish, British universities and their political masters must make a host of small changes and one huge one. The former mostly involve marketing. There is remarkably little differentiation now: Oxbridge colleges and former polytechnics all seem to have the same blurbs, which can lead foreign students to think they have been sold a pup. Too many universities think their job is done after the last exam: in fact forging strong alumni networks overseas is good for recruitment, good for ex-students and good for their alma maters' bank balances.

A geographic bias must be corrected too. China has been the big story, its students flooding Western campuses. Britain targeted that market well. But as that one-child country ages, India is the place to go for. Britain is belatedly trying to fix a change to the visa regime that angered many Indian students in particular by appearing to lump them in with subcontinental terrorists. There is talk of British universities teaming up with Indian ones. But more could be done.

The huge change is psychological: stop thinking of foreign students as mugs to be overcharged to subsidise poor Britons. That has never worked in any business and it is not going to work in this one. Rather concentrate on making British universities as good as possible. That above all means allowing them to charge domestic students something close to the real cost of their education.

This is fair:the average value of an education to the recipient exceeds the direst estimates of the fees involved. It also creates a virtuous circle. Better-funded universities can hire more good professors and build more modern laboratories. Britons will get a better education, and it will attract more foreign students too—who can help pay for more.

The man with the chequebook is your student

With their famous names and skilled workers, Britain's universities are in the same state as its motorbike-makers and banks were half a century ago. One clung to state handouts and the idea that people had no choice: it disappeared. The other decided to sell to the world and deregulated. For all the City of London's recent travails, it is surely a better model for Oxford, Cambridge et al than the likes of the BSA Triumph.

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