Upcoming Tuition Fee Increases: Implications for Students and Universities

Adelaide Coupland travels an hour and a half from Leeds to her mother’s residence in Gainsborough, Lincolnshire, every three weeks. There, she dedicates her Friday evenings, Saturdays, and Sundays from 9 am to 8 pm to serving beauty clients consecutively. Adelaide, a second-year fashion student at Leeds Beckett, operates a luxury nail design business, having cultivated a loyal clientele. She also takes on bar work during every holiday period and schedules nail appointments for clients in Leeds around her four-day-a-week course commitments. She admits, “It does knock me down sometimes – managing it all.” However, Adelaide has pledged to her single-parent mother that she will not request financial assistance while pursuing her university education. Adelaide receives the maximum student loan available for maintenance in England, amounting to £10,200, in addition to securing the annual student loan for tuition fees, which currently stand at £9,250 per year. Consequently, her total student loan debt is projected to reach approximately £58,000 by the completion of her degree. Despite receiving the highest possible loan, Adelaide finds daily life challenging; after her annual rent of £6,800, she has minimal funds remaining for food or other necessities. She meticulously tracks her expenditures in a small red notebook, monitoring every penny. “The bus fare just went up by 50p. I’m in university four days a week so it’s over £50 a month just to get the bus.” At times, she experiences sleepless nights due to financial worries. The financial situation for Adelaide and other students already struggling with living costs and substantial student debt is poised to become even more difficult. An increase in tuition fees in England is anticipated in the upcoming Budget or shortly thereafter, marking the first such allowance in many years. Tuition fees, presently frozen at £9,250 for the current academic year, are slated for a further increase from autumn 2025. This adjustment will align with RPIX, an inflation measure that accounts for all costs excluding mortgage interest. According to Kate Ogden, a senior research economist at the Institute for Fiscal Studies, under this calculation, tuition fees for new degree students in England would rise to £9,500 by October 2025 and reach £10,500 annually by 2029. The implications for students commencing their studies next year are expected to be significant. Adelaide expresses concern about a potential “a wave of hysteria in the student community” given the high level of anxiety surrounding the overall cost of attending university. An increase in tuition fees would be unpopular, and there is a risk that without a corresponding rise in maintenance support, students from the lowest-income households could be deterred from pursuing higher education. The necessity of securing upfront funds for rent, food, transport, and heating also places considerable strain on these students, as well as on middle-income working families who are expected to contribute financially. The issue of maintenance support has also been a prominent topic in discussions within government and with universities. Vivienne Stern, chief executive of Universities UK, which represents over 140 institutions, states, “Maintenance is absolutely central.” She adds, “We’ve had a very long period where maintenance has failed to keep pace with inflation. You end up with a perverse effect that the students from the lowest income backgrounds end up having to take out the largest maintenance loans.” However, Kate Ogden from the independent Institute for Fiscal Studies highlights that since loans are tied to earnings, any outstanding balance is written off after 40 years. She explains, “If they don’t go on to earn very much, or in years when they don’t earn very much, they’re not required to make any loan repayments.” Currently, only 36% of students in England perceive their course as offering good or very good value for money, according to the most extensive study of student experience. This figure represents the lowest across the UK. A further increase in tuition fees would be contentious among students. Moreover, even with such a rise, the fees would still fall short of the £12,000 to £13,000 that universities contend is necessary to cover the current cost of teaching a degree per student. Education Secretary Bridget Phillipson has consistently communicated since shortly after the election that universities must identify their own savings, indicating that there will be no unconditional financial rescue. Part of the challenge stems from a brief period of prosperity for universities when fees increased in 2012, leading them to take out loans, many of which are still being repaid. While the rest of the public sector endured austerity following the 2008 financial crash and faced tightened spending plans, university campuses saw the emergence of cranes as institutions competed to construct facilities to attract both international and domestic students. Vivienne Stern clarifies, “In a large number of cases, universities borrowed money, believing that the undergraduate tuition fee would keep pace with inflation.” She further states, “[They believed] that they could make a confident calculation that their income would be secure in the long term.” The current financial outlook, however, presents a different picture. The Office for Students, England’s regulator, has issued warnings that 40% of universities have projected a deficit for the current academic year. This situation is partly attributable to the borrowing that occurred after the tripling of fees in 2012, with these loans individually structured with a lender by each institution. Circumstances have changed dramatically, as student protests against that fee increase meant that fees have only risen once since then, by £250 in 2017. Consequently, the real value of fees, which constitute the primary revenue source for universities in England, has diminished due to inflation. Additionally, there has been a decline in international applications this year, following the introduction of visa restrictions in January that prevent postgraduates from bringing their partners or children. The full impact of these changes in England will not be known until later this autumn, when an update on university finances is expected from the Office for Students. Throughout England, job reductions and course cutbacks are evident, in some instances limiting student choice by reducing available modules or discontinuing entire courses. The extent of this situation is such that most universities are affected. Academics at Queen Mary University London have been working to maintain a continuous tracker of jobs and courses at risk. Vivienne Stern notes that some universities are also exploring shared back-office functions across neighboring institutions to reduce costs. In the short term, these measures are expected to help stabilize universities, but they will not be sufficient to establish higher education on a long-term stable foundation as expenses continue to escalate. The prevailing sentiment from the government is that universities must not only become more efficient organizations but also intensify their efforts to assist less affluent students in applying for and obtaining degrees. Universities recognize that increasing tuition fees is politically sensitive, and according to Vivienne Stern, they have begun advocating more broadly for a fairer arrangement for students from the lowest income backgrounds. She asserts, “It’s a waste of money to get a student into university, and then to leave them without sufficient financial resources that they can really study and succeed.” The largest study of student experience in the UK indicates that the cost of living is a greater concern than tuition fees when students consider the overall expense of attending university. Research conducted by Loughborough University this year estimated the cost of living as a student and participating in university life to be £18,632. Reintroducing maintenance grants, which were abolished in 2016, would incur even greater costs. For instance, Kate Ogden from the Institute for Fiscal Studies calculates that providing a £2,000 annual maintenance grant to every student would cost the government approximately £2.5 billion per year in current spending. Conversely, student loans are largely repaid by graduates at a rate of 9% of any earnings exceeding £25,000, irrespective of the total debt amount. Any remaining debt after 40 years is written off by the government. Adelaide remains resolute about her degree, stating her desire to “better herself” and her determination to secure a fashion-related job upon graduation. Given her intention to work in a creative sector, which typically offers lower earnings compared to professions like engineering or law, she is likely to make repayments for the entire 40-year period as long as she is employed. In England, partly due to this extended repayment term, economic modeling by London Economics has demonstrated that undergraduate students currently pursuing their first degree are likely to repay 84% of their loans as graduates, with the public exchequer ultimately covering the remaining 16%. This contrasts significantly with Scotland, where the government bears most of the cost of degree provision, and with Northern Ireland and Wales, where university costs are more equitably distributed. Currently, there is no governmental inclination to either abandon tuition fees as the primary funding mechanism for teaching in England’s universities or to restrict the number of available places. Decisions concerning maintenance support could have a more immediate impact on numerous families, as parents are expected to contribute upfront. Kate Ogden observes, “The system at the moment assumes that students from better-off backgrounds are getting support from their parents. It’s not always true that those students do get that support.” She adds, “The trade-offs are really difficult for government and there aren’t any easy answers here.” Ogden concludes, “Lots of universities are struggling and they’ll be looking for some extra support from government.” Caught between universities in urgent need of funding and families concerned about the expense of higher education, the government may find itself unable to satisfy any party.