Last week the Labour government announced a rise in undergraduate tuition fees in England for the first time since 2017. With an estimated 40% of English universities facing a budget deficit this year, the decision should have been a surefire hit. However, the news hasn’t been met with the jubilance one would expect from a desperately cash-strapped sector.
In reality, beyond the initial wave of shares once the news first broke online reaction has been relatively mute. Why hasn’t the tuition hike received more praise? It’s all in the details. Let’s get into the implications of this update and why universities aren’t yet celebrating this tuition fee increase.
The Details of the Tuition Fee Increase
We’ll start off with the facts. On Monday, November 4th Education Secretary Bridget Phillipson announced the price of tuition in England will rise £285. This brings the cost per student from a previous £9,250 up to £9,535, in line with inflation. The fees are set to rise from April 2025, impacting students starting September 2025/2026.
Notably the increase only impacts students studying within England as other regions are in charge of setting their own costs. For the time being, the £9,250 price tag will remain for students in Wales, as well as for non-native students studying in Northern Ireland and Scotland.
The announcement also came with consideration of how increased fees will impact students. Ms Phillipson shared that maximum maintenance loans will rise 3.1%, also in line with inflation. This results in a £414 increase a year to help students offset the tuition hike and rising living costs.
A Drop in the Pond
While an additional £285 per student sounds like a lot on paper, it amounts to a drop in a pond for many institutions. Back in September, Universities UK, a group representing 141 UK universities, outlined the actual tuition fee increase needed to offset rising operational costs. At that time, they projected a 40% rise would be required to meet this threshold. This figure amounts to rough total of £12,000-£13,000 per student per year. The announced increase obviously falls short of this amount by a large margin.
The increase is still helpful in theory right? Well let’s take a look at the impact the £285 fee rise actually has on an institution. Take Sheffield University, which recently disclosed it’s facing a £50k budget deficit this year after a roughly 7% drop in student registrations. In the 2022/2023 the university took in 20,825 undergraduate students. Based off this number, the fee increase would equate to £5.9M in additional revenue, just 11.8% of the amount needed to address their overall deficit.
The fee increase will impact institutions differently, depending on their yearly intake of students and overall financial state. As seen in the example given, the additional boost is just a temporary solution for many. The fee increase alone is simply not enough to overcome the financial troubles UK universities have found themselves in.
Increases Further Offset
While financial relief may be coming in the form of tuition costs, any gains have already been offset by larger tax changes.
On October 30th, Chancellor Rachel Reeves delivered the first new budget from the Labour government in 14 years. Within it, the Chancellor announced an additional 1.2 percentage point increase in employer National Insurance costs, while significantly lowering the threshold at which employers start to pay NI. This amounts to a roughly £372m increase to the sector’s pay bill as a whole. This is in addition to increases in employer pension contributions for many HE institutions in the Teacher’s Pension Scheme announced earlier in the year.
In short, the government has increased incoming funds from students, only to charge Universities more for their employees.
No Reversal of Damaging International Policies
The other major factor impacting UK Universities finances is the drop in international students following the Tories visa changes last year. Data from the Home Office shows that overall visa applications are down roughly 16% this year, heavily impacting universities which relied on additional fees from foreign applicants.
Any changes to international recruitment policies, including the ruling on dependents, would have had a bigger impact than the domestic student fee increase. The obvious omission of the role that international students play on finances has left the educations sector less than impressed.
Student Reaction
University staff aren’t the only ones reeling from recent news. Let’s not forget, it’s students who are currently footing the bill.
There’s been two main reactions from the student body thus far; increased panic or general apathy.
Students have already demonstrated skepticism over the value of university in recent years. Any increase, no matter how small, adds pressure to their decisions, potentially chasing some students further away from higher education. Many students will show even higher consideration of alternate pathways, including apprenticeships, entering the workforce fulltime or remaining closer to home.
For those apathetic the thinking goes; the cost of University is already high, so what’s another couple hundred quid? The £9k price tag is hard to quantify when you don’t have much incoming money. They’ve already agreed to take on the debt so another small increase hardly shakes their resolve.
Whichever side students are on one thing is for certain; the fee increase marks a stark reversal from Kier Starmer’s 2020 pledge to abolish tuition fees. Current and incoming students won’t soon forget the direct impact this news has on their finances.
No Long-term Solution
In the end we’re left relatively where we started: no long-term solution to solve the evolving cash crisis that UK universities face.
The announcement last week is only set to affect fees and loans in the 2025/2026 academic year, leaving more questions than answers. Education Secretary Bridget Phillipson says the government will set out a long-term plan for universities in the coming months. We’ll have to wait and see what major reform they bring to the sector in the next announcement.
For now, instead of celebrating the cash injection, there are a lot more people left upset about their current state.
