Why Masters students are heading for the Continent

European universities used to seem strange, Byzantine creatures. Postgraduate courses on the Continent threatened to stretch on for years and the language barrier meant that only a few brave souls even looked in the door. Not any more. With thousands of postgraduate courses on the Continent now taught in English, the UK's lucrative international postgraduate market may be under threat. Universities UK reckons that the UK makes £3.5bn a year from international students, most of whom are on postgraduate courses.

Until recently British universities had some serious advantages over their European cousins. But the Bologna Agreement has cut through the Continent's higher education red tape, bringing continental qualifications in line with Britain's. And now the UK's main selling point - offering teaching in the world's second language - is facing competition from postgraduate courses across Europe taught in English at a fraction of British fees.

"Inevitably it is a threat," says Professor Howard Green, who heads the UK Council for Graduate Education. "More players moving into the market will affect UK recruitment. The major threat is in the sciences. There are already difficulties in recruitment in the sciences. This will make that more difficult." Professor Green believes that the only answer is more national co-ordination by universities in postgraduate education.

Naveed Iqbal is exactly the kind of student that Professor Green is worried about losing. Iqbal studied economics in Pakistan before looking abroad to further his studies. He first considered the UK, but says that he was turned off by the cost. "Fees in the UK are too high," he says. "In Britain education has become commercialised and it becomes very difficult for a person to finance their studies there."

Iqbal is now doing one year of a Masters course at Germany's Ruhr Universitat Bochum before going on to do his PhD there. In the UK he would be looking at fees of around £10,000 a year. In Germany he has to pay €2,400 (£1,615) for his first year. After that there are no fees.

Professor Green is not alone in his concern about students like Iqbal looking for cheaper options elsewhere. Professor Drummond Bone, president of Universities UK, notes that Britain's major competition still comes from other countries in the English speaking world, but adds that Europe is catching up fast. In the past three or four years, he says, Germany has gone from a minuscule number of international students to tens of thousands. "It's increasing quite dramatically," he says.

Professor Bone believes that the UK brand can stand the pressure. He also reckons, as do many others, that the current fees gap between Britain and the rest of Europe will soon close. Germany's Landers, or federal states, can now charge tuition fees and some have already introduced fees for Masters courses.

Britain's biggest competitor on the Continent is the Netherlands. It is now possible to do more than 1,000 courses in English there, many postgraduate. They are also the most well established - the Netherlands has been running university courses in English since the 1950s, although it is only in the past few years that it has really taken off. In the Dutch case the motives are not just financial. The Netherlands, Sweden, and Finland's main motivation for offering courses in English is to attract the best international talent. "We must offer courses in English to preserve our place in the international network of scholarship," says Han Vanderhorst, of Nuffic, the organisation that heads the Netherlands' international higher education drive. "We have few native speakers so we must be open to researchers from abroad to avoid becoming a provincial backwater."

While this explains the interest of Swedes, Finns, and the Dutch in postgraduate courses in English it can hardly be said to apply to the Germans or French. Germany now runs around 300 postgraduate courses in English; France runs more than 100. This is extraordinary for the French, who usually jealously guard their language against the linguistic rapacity of les Anglo-Saxons. "Lots of students from India and China go the US and England," says Swarna Arora, who heads EduFrance, the French government's information service for international students, in London. "The main idea is to attract them to France." Is this a defeat for French as an international language? "No. It's no defeat at all," says Arora. "It's a practical decision. As they study in English students will pick up French."

It is easy to understand the attraction, for international students and Brits. At French universities, students pay fees of around €400 a year and are paid accommodation costs by the government of around €125 a month. In the Netherlands, fees for Brits are around €1,500, with international students paying around €10,000. In many German and Scandinavian institutions courses are still free for European and international students.

Some British students are even making the move. Will Kelly is doing an MA in literary studies at the Netherlands' Leiden University. Not only are the fees a third of what he would be paying in the UK, living costs are cheaper, and Kelly has found part-time work in marketing while he studies, in English. "The lingua franca at work is English," he says. "You can live here and just speak English. It's a bilingual country."

Some welcome the new freedom that this gives students. Simon Felton is general secretary of the National Postgraduate Committee. "It is an opportunity for students," he says. "There is more choice for students about where to study and it's cheaper."

Felton is not alone in welcoming more competition from the Continent. "The international student market is a very big market and it's expanding rapidly," says Sir Roderick Floud, vice-president of the European Universities Association. "There's room for everybody." Professor Floud is not concerned about the fee differences. When it comes to education, he says, people go for quality, not bargains. And the new wave of English-taught postgraduate courses might be a boon. "Competition is usually positive," he says. "The fact that other people are thinking about courses will be a stimulus to British academics."

Even academics who were worried about the Bologna Agreement now welcome this competition. Paul Furlong is head of European studies at Cardiff University. "After some initial concerns my impression is that the UK Masters seems to be holding up quite well," he says. "This is a challenge rather than a problem." Professor Furlong thinks that the future is in dual Masters programmes, where students get two qualifications from two universities simultaneously. Cardiff's School of European Studies is already running a dual undergraduate degree with the Institute of Political Studies of Bordeaux. Professor Furlong hopes to bring in similar postgraduate programmes.

Some already exist. John Reilly, who heads the UK Socrates-Erasmus Council, is helping to develop joint Masters between European universities. "There are new opportunities as well as challenges here," he says. "This offers opportunities for closer partnerships."

As European universities bring in British-style tuition fees this co-operation could become more important than today's competition. The European threat may be short-lived. The European opportunity is here to stay.