Category: Fees and Funding

  • Counting the cost of financial challenges in English higher education

    Counting the cost of financial challenges in English higher education

    The financial health of UK universities has become a pressing concern, with widespread reports of deficits and shrinking operating surpluses. Yet until now, robust evidence on how these pressures shape institutional decisions – on investment, staffing, research, and student services – has been limited.

    To address this evidence gap, interviews were conducted with chief financial officers and directors of finance in 74 of the 133 higher education institutions in England between March and May 2025, covering 56 per cent of institutions.

    The study covered all TRAC peer groups, from research-intensive universities to specialist arts and music colleges. The findings reveal stark differences in financial resilience across the sector, but also common themes that underscore systemic vulnerabilities.

    A striking 85 per cent of institutions reported either an operating deficit, break-even position, or reduced surplus in the current year. Only 11 institutions – just under 15 per cent – maintained or improved their operating surplus. Even among these, financial pressures were evident, with cost-cutting and efficiency drives mirroring those in deficit institutions.

    Low research intensity institutions are most exposed, with 95 per cent in deficit or reduced surplus, while high research intensity universities fare slightly better at 79 per cent. Arts and music colleges also show significant vulnerability, with nearly nine in ten reporting financial strain.

    Strategies and trade-offs

    The origins of financial weakness vary by institutional type. For research intensive universities, the decline in international tuition fee income is the dominant concern, compounded by visa restrictions and heightened global competition. Medium and low research intensity institutions cite rising staff and estate costs, alongside pension liabilities. For arts and music colleges, the freeze on UK tuition fees was a critical issue, although face additional challenges given the liability of smallness.

    These challenges are not short-term blips. An overwhelming 97 per cent of respondents view the current situation as a structural, long-term problem. Many argue that the sector’s business model – heavily reliant on international student income and constrained by capped domestic fees – is fundamentally unsustainable. And more worryingly difficult to change in the short to medium term.

    Faced with financial stringency, universities are deploying a mix of defensive and adaptive strategies. Borrowing has been rare – only five per cent of deficit institutions increased debt – but asset sales and diversification of income streams are common. Over three-quarters of institutions are actively seeking new revenue sources, from commercialisation and estate rental to online learning and transnational education partnerships.

    Interestingly, financial pressure is not uniformly leading to retrenchment. While some institutions have closed departments or dropped programmes – particularly among medium and less research-intensive universities – many are introducing new courses, both undergraduate and postgraduate, to attract students and generate income.

    Staffing, however, tells a more sobering story. Nearly half of deficit institutions have implemented voluntary redundancy schemes, and around one-fifth have resorted to compulsory redundancies. Recruitment freezes are widespread, affecting academic and professional staff alike. These measures, while necessary for financial stability, risk eroding institutional capacity and morale.

    Counting the cost

    The ripple effects of financial constraint extend beyond staffing. Research support is under significant strain: over a third of institutions report cuts to research facilities and internal consortia. Yet there are pockets of investment – 18 per cent of institutions have increased funding for libraries and data services, and nearly one-fifth have boosted support for industrial collaborations, reflecting a strategic pivot toward partnerships and innovation.

    Student experience has, so far, been relatively protected. Most institutions have maintained spending on mental health, wellbeing, and inclusion initiatives, though career development and academic support have seen reductions in about a quarter of cases. Investment in estates is more uneven: while many institutions are deferring maintenance and new builds, over half are increasing spending on digital transformation – a clear signal of shifting priorities.

    Financial turbulence is also reshaping leadership dynamics. Nearly 90 per cent of respondents agree that leadership teams are under heightened pressure and scrutiny, with a growing emphasis on short-term decision-making. This environment is taking a toll on staff wellbeing: two-thirds of respondents report negative impacts on mental health, alongside rising workloads and job insecurity. Trust in leadership has declined in almost half of institutions, underscoring the human dimension of the financial crisis.

    Perhaps the most sobering finding is the sector’s view of external support. Over 60 per cent of respondents rated government and regional assistance as ineffective. The message is clear: incremental adjustments will not suffice. Respondents called for a fundamental review of the funding model in higher education. Without decisive intervention, the risk is not just institutional hardship but systemic decline – jeopardising the UK’s global standing in higher education and research.

    Source link

  • Universities now need to be much clearer about the total cost of a course

    Universities now need to be much clearer about the total cost of a course

    Now that we know the undergraduate fee caps that will apply in England in 2026-27 and 2027-28, now seems like a good time to get something off my to-do list.

    For the sector, the headline is financial stability – after years of the fee cap being frozen while costs rose, two years of confirmed inflationary increases provide some relief.

    But the announcement also crystallises a compliance problem that has been building since April, when new price transparency provisions came into force under the Digital Markets, Competition and Consumers Act 2024.

    Last week the Competition and Markets Authority published finalised guidance on Complying with the law on unfair commercial practices relating to price transparency.

    For a student starting a three-year degree next September, the total tuition cost is now entirely calculable. Year 1: £9,535. Year 2: £9,790. Year 3: £10,050. Total: £29,375.

    And yet university prospectuses and websites overwhelmingly advertise just the Year 1 figure – understating the actual three-year cost by nearly £2,000.

    Under the new CMA guidance that practice looks legally vulnerable. And, at least for England, OfS about to consult on applying a new “treating students fairly” condition to all registered providers, the regulatory architecture to enforce compliance is assembling itself.

    A note before I get going – the DMCC Act is UK-wide legislation, and the CMA’s price transparency requirements apply to universities in Scotland, Wales and Northern Ireland just as they do in England.

    The OfS regulatory overlay – particularly Condition C5, whatever version of it gets applied to existing providers, and a presumption of non-compliance where consumer law has been breached – is England-specific.

    Scottish, Welsh and Northern Irish universities don’t face the same automatic read-across from CMA findings to registration consequences. But they remain fully exposed to CMA enforcement, including direct fines and redress orders. It just means the enforcement route is different.

    £29,375. And the rest

    CMA209 is formal CMA guidance issued under the DMCC Act on the price transparency provisions – not HE-specific, but nothing in it carves higher education out.

    At its heart, it says that whenever a trader gives information about a product and its price, that is usually an “invitation to purchase” – and at that point the consumer must be given a realistic, meaningful and attainable total price, including any fees, taxes or other payments they will necessarily incur if they go ahead.

    The guidance defines “invitations to purchase” broadly – a website listing, an advert, a prospectus entry, an email, an instant message from an ambassador, so long as it indicates the characteristics of a product and its price and enables the consumer to decide whether to purchase or take some other “transactional decision.”

    Universities can’t rely on the detailed fee terms being buried on a separate page, or in the conditions of offer, to cure a misleading headline later in the journey.

    Three specific practices are now explicitly prohibited or heavily restricted:

    Drip pricing – showing one price up front and then introducing mandatory charges only later in the process – is now a prohibited practice under section 230 of the DMCC Act. The guidance is unambiguous:

    The practice of showing consumers an initial headline price for a product and subsequently introducing additional mandatory charges as consumers proceed with a purchase or transaction – sometimes called ‘drip pricing’ – is prohibited under the UCP provisions.

    Partitioned pricing – giving a list of components without also giving the overall total – is:

    …generally prohibited since it is not consistent with providing the ‘total price’ of the product.

    You can’t say “Tuition fee £X, additional compulsory course costs apply, see small print” without also giving either a single total price or, where that total genuinely cannot be calculated, a clear and prominent explanation of how it will be calculated.

    Non-prominent variable pricing information – where some part of the total price cannot reasonably be calculated in advance, traders must tell consumers how that part will be calculated, “with as much prominence as” any calculable components. A footnote in the terms and conditions will not do.

    Mandatory charges and hidden course costs

    The guidance is explicit that the “total price” must include any fees, taxes, charges or other payments that the consumer will necessarily incur. Mandatory charges include – per the guidance –

    administration fees, however described, such as booking or processing fees, quality assurance charges, platform charges… [and]… fees relating to additional services that cannot be avoided.

    Crucially, the guidance also says that charges arising from the trader’s own input costs – including the costs of third parties they choose to contract with – are mandatory and must be baked into the advertised price, not bolted on separately.

    Consumers have no control over such expenses. They cannot compare and select the third-party provider or products they use and have no way of opting out of them.

    I’m thinking maybe mandatory DBS and occupational health checks for health courses where the university organises the process, or compulsory field trip costs where the programme design offers no realistic non-paying route. Under CMA209, those all look like mandatory charges that should be rolled into the total price shown wherever the course and its fee are advertised – not left for discovery on a faculty web page in week three of term.

    The guidance is also explicit that merely calling something an “extra” or listing it separately does not make it optional:

    A charge is mandatory if the consumer will have to pay the additional charge in order to purchase or receive the advertised product. It is still a mandatory charge even if the consumer could theoretically avoid it by purchasing or signing up for an additional product.

    The guidance notes that refundable security deposits – money held against potential damage that’s “automatically refunded if not called upon” – don’t need to be included in the total price.

    But non-refundable deposits that form part of the purchase price are different. International students routinely pay substantial non-refundable deposits to secure places – often £1,000–3,000 or more, and sometimes 50 per cent of the first year’s fees.

    These are mandatory charges, payable before the student can even accept an offer. Under CMA209’s logic, the existence of the deposit, its amount, and the circumstances in which it might be forfeited are all material information that should be disclosed upfront – not discovered partway through the application process.

    The guidance’s emphasis on not introducing charges “later in the process” is directly relevant – if a student applies based on a headline fee figure and only later discovers they need to pay a substantial non-refundable deposit before they can confirm their place, that looks a lot like drip pricing.

    The “additional course costs” problem

    Plenty of universities maintain a separate page – often linked from the main fees section – listing “additional course costs” that students should “budget for.” Under CMA209, this structure is problematic on multiple fronts.

    First, where those costs are genuinely mandatory – DBS checks, professional registrations, required equipment – listing them separately is textbook partitioned pricing. The guidance is explicit:

    It is not enough to present the individual price components and expect the consumer to calculate the total price.

    A course page that shows tuition at £9,535 and then separately lists a £50 DBS check, £150 uniform and £120 professional body registration is doing exactly what CMA209 prohibits – presenting components without the total.

    Even where costs relate to optional modules, the guidance requires that variable pricing information be given “with as much prominence as” the calculable headline price. A link to a separate page does not constitute equal prominence.

    The “optional” categorisation itself deserves scrutiny. The guidance notes that a charge remains mandatory “even if the consumer could theoretically avoid it” through alternative choices.

    If a geology degree features fieldwork in its marketing, and the fieldwork module has a £500 field trip cost, the theoretical existence of non-fieldwork routes doesn’t make that cost optional for students buying the product as advertised.

    The test is whether the base price is “realistic, meaningful and attainable” for the degree as typically experienced – not whether a determined student could engineer a cheaper path through.

    Universities may need to audit every course’s additional costs and ask hard questions about what’s genuinely optional versus what’s mandatory in practice. The answer will often be uncomfortable. Oh, and the cost of resitting something also clearly needs more… clarity.

    Multi-year degrees and in-contract price increases

    The guidance has a specific section on “periodic pricing” – contracts where the consumer makes regular payments in return for ongoing services, such as subscriptions, gym memberships or broadband. It distinguishes between “rolling contracts” (can be cancelled any time, so the total price is just the price per period) and “minimum term contracts” (consumer commits for a defined period).

    For minimum term contracts, traders can either provide:

    ….the cumulative price that the consumer will have to pay over the entire minimum length of the contract, inclusive of all mandatory charges in that period

    …or provide:

    the total price that the consumer pays for each period of the contract… alongside a prominent statement of the number of months the consumer is committed to pay that price for.

    Most undergraduate degrees look very like a minimum-term periodic arrangement in substance. The student expects to be there for three or four years, paying annual tuition fees for ongoing access to teaching and services, and will normally make their transactional decision on the basis of the whole degree rather than a single year.

    The CMA’s own 2023 HE guidance reinforces this as follows:

    …the contract for educational services is for the full duration of the course, with milestones to be achieved in order to progress to the next year or other period of study.

    Applied to tuition fees, that raises some uncomfortable questions. If a university advertises fees at £9,535 for a three-year degree, is it in effect inviting the student into a three-year minimum term contract for services, with periodic payments due each year?

    If so, under CMA209 it should either present the total cumulative cost for the minimum term – or present a per-year total price plus a prominent statement of the minimum term, with any one-off fees (or, by analogy, any known annual increases) properly disclosed.

    Guidance was already clear that fee variation clauses are more likely to be fair if they include a “worked example” of how the clause might operate. Abstract percentages – “fees may increase by up to 5% annually” – don’t give consumers equivalent information to concrete pound figures.

    An international applicant who sees “£28,000” as the headline may not instinctively calculate that (“up to”) 5 per cent annual increases would mean approximately £88,200 over three years rather than £84,000 – a difference of over £4,000.

    For that percentage to have “as much prominence as” the headline price, it would need to be translated into the actual cost impact. This is particularly important for vulnerable consumers who may not run compound calculations when making application decisions.

    Universities might have argued that the total cost of a degree “cannot reasonably be calculated in advance” because future fee caps depend on inflation forecasts not yet made. For home UGs in England, that defence has now evaporated.

    Continuing to advertise “£9,535” when £29,375 is knowable would, under CMA209’s logic, be hard to reconcile with the requirement to provide the total price in an invitation to purchase.

    The guidance is explicit that traders should use any information already available to calculate the total price. The worked example for hotel bookings states that:

    …if a consumer searches for a ‘three-night stay for two people’ on a hotel booking website, the trader should use this information to calculate the total price based on those requirements including any per-transaction charges (and any other mandatory charges).

    By analogy – if a student is applying for a three-year degree starting in 2025, the university has all the information it needs to calculate and display the total cost.

    As we noted when the DMCC provisions came into force in April, vague claims that fees “may rise with inflation” may breach the rules if they fail to explain how, when, or by how much – or if that information isn’t given equal weight to the headline figure.

    Universities might argue that the “product” is access to one year of teaching and assessment, with progression to subsequent years being a separate (conditional) transaction. Under that framing, each year would be a genuinely rolling contract and the periodic pricing provisions wouldn’t require cumulative totals.

    The problem with that defence is threefold – it contradicts how universities market degrees (as three or four-year qualifications leading to awards), it contradicts the CMA’s own 2023 HE guidance on the duration of the educational services contract, and it would require universities to fundamentally redesign their offer letters, student contracts, and progression frameworks. It is not, I tentatively suggest, an easy pivot.

    The deferral problem

    The interaction between in-contract price increases and deferrals creates another drip pricing risk that universities may need to address.

    A student who applied for 2025 entry and accepts an offer does so on the basis of £9,535 fees. If they then defer to 2026, they face £9,790 – a £255 increase. The CMA’s 2023 HE guidance already flagged that deferrals require:

    …transparent information on the level of fees for that year if they could increase, and any other significant potential aspects of the course that you know will or may be different.

    Under CMA209, this looks like exactly the kind of later-revealed mandatory charge that the drip pricing prohibition targets. The student was shown one price when they made their transactional decision (accepting the offer), then charged a different, higher price when they actually enrol. Universities offering deferrals with “fees will be the rate applicable in your year of entry” are building this mechanism into their standard practice.

    The compliant approach would be to disclose at the point of offer – or certainly at the point of accepting a deferral – what the Year 1 fee for 2026 entry will be, what the total degree cost will be (using the now-known 2026-27, 2027-28, and projected 2028-29 figures), and how this differs from the cost had the student started in 2025. Anything less risks a student committing to defer without understanding the price implications.

    Non-standard degree structures

    The DfE announcement also creates specific presentation challenges for degrees that don’t follow the standard three-year full-time model.

    Foundation years: The announcement confirms that classroom-based foundation years remain frozen at 2025-26 levels while subsequent years increase. A four-year programme with a foundation year therefore has a complex cost profile: Year 0 at one price, Years 1–3 escalating. You cannot simply multiply the Year 1 fee by four – and the total will be different from a standard three-year degree starting in the same year. How should universities present this? The CMA209 logic suggests they need to show the actual cumulative total for the specific programme structure, not an indicative per-year figure that doesn’t reflect reality.

    Placement years and years abroad: Different percentage caps apply – 20 per cent of the full fee for sandwich placements, 15 per cent for years abroad and Turing years. A four-year degree with a placement year has three years at full fee and one at 20 per cent, while a degree with a year abroad has three at full fee and one at 15 per cent. For a 2025 entrant on a four-year sandwich course, the calculation would be £9,535 (Year 1) + £9,790 (Year 2, placement) × 20% + £10,050 (Year 3) + [2028–29 fee] (Year 4) – giving a total of around £21,543 plus the unknown final year. Universities need to work through these calculations for every programme variant and present the results clearly.

    Accelerated degrees: Two-year accelerated degrees have higher annual caps (£11,750 for 2026-27, £12,060 for 2027-28). A student choosing between a standard three-year degree and an accelerated two-year version is making a comparison that matters – £29,375 over three years versus approximately £23,810 over two years (for a 2026 entrant). CMA209’s requirement that prices be “realistic, meaningful and attainable” for the product as advertised suggests universities should be helping students make this comparison, not obscuring it with per-year figures that don’t facilitate like-for-like assessment.

    Part-time study: Part-time degrees stretch over 4–6+ years, accumulating more annual increases. The maths becomes more complex and the cumulative cost may substantially exceed the nominal fee multiplied by FTE years. Again, the guidance suggests universities should be doing this calculation for students, not leaving them to work it out themselves.

    Home students versus international students

    For home students in England, the government has now confirmed two years of fee increases, with a stated intention to legislate for automatic annual uprating thereafter. Ironically, the specific inflation measure remains technically unconfirmed – the Post-16 Education and Skills White Paper indicated fees would rise “in line with inflation” but didn’t specify which index.

    You and I know that the figures are the OBR’s projections of inflation as of today, but that’s hardly an “objective verifiable inflation index.” Universities can at least show the trajectory for students whose entire degree is now priced.

    For international students, the position is much more exposed. Here, fee-setting is entirely at the university’s discretion, and annual uplifts of several hundred pounds – or several per cent – are routine.

    If a university can state “fees will increase by up to X per cent annually,” then it can calculate a maximum total cost for the degree. The guidance’s logic would suggest it should be displaying that maximum – or at minimum, the inflation cap and worked examples – with equal prominence to the Year 1 headline figure. Asking a student to commit to a multi-year programme on the basis of “£28,000 in year 1 – fees may rise in future years” without any structure looks exactly like the sort of thing this guidance is trying to stamp out.

    The universities that have moved to fixed-fee guarantees are in the cleanest compliance position. If the fee genuinely won’t increase, you can advertise Year 1 and the cumulative total is just three or four times that figure. Everyone else – particularly those with vague “may increase with inflation” language buried in terms – is more exposed.

    The deposits problem

    The deposit practices that have become widespread in international recruitment also deserve particular scrutiny under the new framework.

    According to UUKi survey data from last year, two thirds of providers charge deposits for international students at a specific monetary amount, with a further 17 per cent setting deposits as a percentage of the tuition fee – often 50 per cent.

    Universities have been encouraged to set earlier deadlines for applications and deposits as a way of “managing risk” – but the effect is to shift that risk onto students, who must commit substantial sums before they have complete information about accommodation, living costs, or visa outcomes.

    Of course universities have been explicitly encouraged to use deposits to reduce the likelihood of students transferring out of the degree programme. The logic is straightforward – if a student has already paid £5,000–15,000 that they’ll lose if they change their mind, they’re locked in.

    But that sits uncomfortably with OfS Condition F2, which requires registered providers to publish clear information about transfer arrangements – and with OfS’ legal duty to monitor the availability and utilisation of student transfer schemes.

    More broadly, the Consumer Rights Act 2015 already constrains what universities can do. Cancellation or early termination charges must be limited to what is “fair and proportionate” – meaning the university can recover its genuine costs or lost profit, but cannot levy charges designed to punish students for changing their mind or to scare them into staying in the contract.

    When challenged, universities might argue that the CAS allocated to the student could have gone to someone else, so they’ve lost the profit they would have made. But if the university hasn’t actually recruited to its CAS allocation – if numbers are down and places remain unfilled – that argument collapses.

    CMA’s existing guidance is clear that traders can only retain money to cover actual costs and losses, not to enforce compliance targets or prevent student choice. Universities aren’t really allowed to shift the burden of their regulatory obligations or commercial risks onto students.

    DMCC adds further layers. Under the duty of professional diligence, universities must act with the skill, care, and honesty that a reasonable trader should exercise in line with good market practice.

    Breaching that duty becomes unlawful when it distorts, or risks distorting, a consumer’s decision-making – a bar that drops further when the consumers in question are vulnerable. Practices that exploit a student’s weakness, confusion, or lack of experience can breach the Act even if no actual loss can yet be proven.

    OfS’ own prohibited behaviours list – currently applicable only to new registrants but expected to be extended – includes:

    …requiring a student to pay a disproportionately high sum of money as penalty to the provider or for services which have not yet been supplied, where the student decides not to sign the contract or withdraws from the contract after signing it.

    In its consultation response, OfS argued that the prohibited behaviours it was proposing closely reflect existing legal requirements “with which traders in any sector are required to comply.”

    If that’s right, then the current deposit practices of many universities may in many cases already be legally questionable – the prohibited behaviours list just makes explicit the kinds of practices consumer protection law is already concerned about.

    The interaction with immigration policy is awkward. The Legal Migration white paper signalled that UKVI will soon be demanding visa refusal rates of less than 10 per cent and course enrolment rates of at least 90 per cent of CASs issued.

    In the C5 consultation, one respondent suggested that OfS should work closely with UKVI to “agree a position on non-repayment of deposits for visa-sponsored students” – presumably because universities are using deposit forfeiture to manage these compliance targets.

    But again – universities can’t shift the burden of their regulatory obligations onto students. If a student’s visa is refused through no fault of their own, or if they withdraw before enrolment for legitimate reasons, treating a 50 per cent deposit as simply forfeited looks difficult to defend as “fair and proportionate” under consumer protection law.

    Postgraduate provision

    I’ve focused on undergraduate study here, but the transparency issues are at least as acute – arguably more so – for postgraduate provision.

    Taught masters programmes of one year limit the in-contract increase problem. But doctoral programmes run for 3–4+ years, with annual fee increases that are often entirely uncapped for international students. A PhD student starting at £25,000 per year with 5 per cent annual increases faces a four-year total of over £107,000 – significantly more than £100,000 if they’d assumed stable fees.

    The sums involved make transparency even more important, and current practice is often worse than undergraduate – many doctoral programme pages show only the current-year fee with no indication of how it will change.

    Postgraduate loans for home students are capped and don’t cover the full cost of many programmes, creating an additional transparency issue – the gap between the loan available and the fee charged is itself a mandatory cost that students need to understand upfront.

    The deposit problem is particularly tricky for international PGT students. A student who paid a 50 per cent deposit on a £20,000 masters programme – £10,000 – and then changed their mind about the course, or had accommodation fall through, or discovered that the cost of living information the university supplied was three years out of date, faces losing that entire sum unless they fit restrictive refund criteria.

    They’re locked in, or they’re out of pocket – and the consumer protection framework suggests many of those lock-ins may be unfair.

    Agents and intermediaries

    The guidance is explicit that both the party making an invitation to purchase and the trader on whose behalf it is made can be liable:

    If the product is being marketed on the seller’s behalf or in their name, the seller may also be responsible if the invitation to purchase fails to comply with the requirements of the UCP provisions.

    This has big implications for a sector that has become heavily dependent on international recruitment agents. Agents are involved in over 50 per cent of international student admissions – in some markets, the figure reaches 70 per cent.

    Under CMA209, if an agent in Lagos or Mumbai is advertising “Study at [University] for £22,000” without disclosing annual increases or the mechanism by which fees will rise, both the agent and the university are potentially in breach of the price transparency provisions.

    The guidance says that traders using other businesses to market their products must ensure they have provided those businesses with all the information required by the DMCC Act, and must also ensure that those businesses are complying with their obligations under the DMCC Act.

    If we’re honest, that’s compliance burden most universities are not currently equipped to manage. Many do not systematically audit agent materials. Commission arrangements are commercially sensitive and rarely transparent. Sub-agents – informal intermediaries whose details may not even be known to the contracting university – add further layers of opacity.

    The guidance creates, at minimum, an expectation that universities will need much tighter control over what partners and agents say about fees and increases.

    The guidance also notes that:

    …if an invitation to purchase is directed at UK consumers, it must comply with the relevant UCP provisions, even if the trader making the invitation to purchase is located outside the UK.”

    That jurisdictional reach catches overseas agents advertising to prospective international students who will study in the UK.

    Bang average

    Consumer protection law uses an “average consumer” test – would the practice mislead or affect the transactional decision of a typical consumer? But that test isn’t applied uniformly.

    Where a practice is directed at a particular group, the average consumer is judged by reference to that group. And where a practice is likely to materially distort the behaviour of consumers who are “particularly vulnerable” due to mental or physical infirmity, age, or credulity, it’s assessed from the perspective of the average member of that vulnerable group.

    DMCC recognises that vulnerability can arise from permanent characteristics – age, disability, low literacy – or from temporary circumstances like bereavement, financial stress, or life crisis.

    Applying from abroad to study in an unfamiliar country, navigating a complex visa system, relying on agents whose incentives may not align with your own, committing substantial deposits before you have complete information – all of this creates vulnerability in the consumer protection sense.

    In higher education, several groups of students could reasonably be considered vulnerable consumers in this context:

    International students face acute information asymmetry. They may be unfamiliar with UK consumer protection norms, language barriers may affect comprehension of complex fee terms, they’re making decisions from a distance often based on agent advice, and the financial stakes – total cost of attendance including living costs, visas, flights – are enormous. The combination of agent recruitment practices and student vulnerability is a killer – agents have financial incentives that may not align with student interests, students may not know agents are paid by universities, and the power imbalance is huge.

    Young people – most undergraduate applicants are 17ish when they make application decisions – are making one of the largest financial commitments of their lives with limited experience of contracts, consumer rights, or long-term financial planning. The guidance’s examples of misleading practices often involve consumers failing to notice or understand pricing complexity – that risk is heightened for young people navigating an unfamiliar system.

    First-generation HE students lack family knowledge to draw on. They may not know what questions to ask, may be more susceptible to impressive-sounding marketing claims, and may not have access to informal networks that help more advantaged students navigate the system.

    Students from disadvantaged backgrounds have a different vulnerability – the financial implications of hidden costs or unexpected fee increases fall harder on those with less family buffer. The same opaque pricing that a wealthy student might absorb as an inconvenience could derail the plans of a student with no margin for error.

    DMCC requires traders to design their sales practices, contracts, and communications with these vulnerabilities in mind. It is no defence to say that the “average” consumer would cope – if a foreseeable group of people is likely to be misled, disadvantaged, or harmed, the practice breaches the Act.

    The duty of professional diligence demands that universities act with the skill, care, and honesty that a reasonable trader should exercise in line with good market practice. Practices that (even inadvertently) exploit weakness, confusion, or lack of experience can be unlawful even if no actual loss can yet be proven.

    If university marketing practices disproportionately affect vulnerable groups – and there’s good reason to think they do – the compliance standard should be assessed accordingly.

    A fee presentation that might not mislead an experienced, sophisticated consumer could still breach the rules if it’s likely to mislead the students actually being recruited. The “average consumer” for an international recruitment agent’s materials isn’t a UK-based parent with professional advice – it’s someone in China, Nigeria or India trying to understand what three years of study will actually cost.

    OfS is coming

    If all of this feels a bit theoretical – the CMA has guidance, but will anyone actually enforce it? – OfS’ parallel moves should concentrate minds.

    OfS has already been pointing providers in this direction:

    …if providers are making changes that increase fees for new entrants in line with prescribed limits, they should make sure that prospective students have access to information about the full cost of their course, for the duration of the course, before they commit themselves to undertaking a higher education course.

    That language – “full cost of their course, for the duration of the course, before they commit” – is close to what CMA209 now makes a legal requirement. The sector can’t reasonably claim it had no warning.

    OfS has also established an important ceiling for continuing students – they can’t be charged more than the lower of either the relevant prescribed fee limit, or the level to which fees can be increased in line with the inflationary statement recorded in the Access and Participation Plan (or annual fee information return) that was in effect in their year of entry.

    That inflationary statement mechanism – which effectively caps what returning students can be charged – creates a documented ceiling that universities could, in principle, use to calculate and disclose maximum cumulative costs at the point of admission.

    It also means that the universities on my spreadsheet that have already increased their fees for continuing students beyond that which was committed to in the APP are very much risking it for a biscuit.

    Sinclair C5

    Of course OfS has published a new initial condition of registration, C5 (“Treating students fairly”), a version of which it says it will consult on applying to existing registered providers imminently. The condition is currently in force for new registrants – extending it to the existing register would make fee transparency a live regulatory issue for every provider in England.

    C5’s version of “consumer protection law” explicitly includes the Digital Markets, Competition and Consumers Act 2024 – so non-compliance with CMA209’s price transparency provisions would directly implicate the condition. And the scope is, if anything, broader than CMA209 itself.

    The condition covers:

    …any arrangements the provider has made or plans to make to attract individuals to study at the provider, encourage individuals to submit applications to study at the provider, or to otherwise communicate with students or anyone with an interest in studying at the provider.

    The accompanying guidance defines “information about the provider” as anything individuals may rely on in their decision-making – including:

    …emails or other forms of communication; presentations delivered at open days; any written material used to inform communications (such as scripts for recruitment phone calls).

    On agents, C5 is if anything more explicit than CMA209. The guidance states that:

    …where a provider works with recruitment agents or other entities similarly working on its behalf, it will be held accountable for their behaviour.”

    And the provider must:

    …undertake appropriate due diligence on all third parties and on all third parties’ arrangements.

    On partnerships, the condition “applies to all higher education provided through all forms of partnership arrangements” and may result in “more than one provider being responsible for compliance with this condition in relation to the same student.”

    Delivery providers in franchise arrangements will have to must submit lead provider documents – including “template student contracts (including terms related to tuition fees and additional costs)” – and if they think those documents contain problematic provisions, they’re expected to work with the lead provider to address this before applying for registration.

    What are universities actually selling?

    More broadly, the price transparency requirements raise an uncomfortable question – what, exactly, is the “product” that universities advertise?

    Prospectuses don’t just show lecture theatres and libraries. They feature students playing sports, performing in shows, running societies, going on trips. Open days tour the SU facilities. Marketing copy talks about “joining a vibrant community” and “making friends for life.”

    If that’s part of how the product is marketed, CMA209 suggests it’s part of the product – and if accessing it costs extra, those costs are material information. A university advertising a “great and vibrant SU” without mentioning that club membership fees typically run to £5–50 per society, that sports clubs charge for kit and fixtures, and that participation in activities often costs money beyond tuition, is arguably presenting a version of the product whose price doesn’t reflect what students would actually pay to access it.

    Where a free inter-campus bus or shuttle is part of that promotional bundle – the thing that makes a multi-site timetable viable without extra cost – withdrawing it mid-course effectively increases the mandatory costs faced by students. At minimum, that raises the same kinds of questions about hidden charges and changes to the product that the price transparency regime is designed to address.

    For students from lower-income backgrounds who chose the university partly based on its marketed student life, discovering the hidden costs of participation is a form of bait-and-switch – even if legally defensible.

    The logic extends to living costs. Section 227 of the DMCC Act prohibits misleading omissions – failing to provide material information that consumers need for informed decisions. For students choosing between universities, living costs are often the second-largest expense after tuition, and they vary enormously by location. A student choosing between London and a smaller city could face a £15,000+ difference over three years – that’s material.

    Where universities make claims about accommodation, those claims must be accurate. “Affordable accommodation from £X per week” is misleading if that figure refers only to heavily oversubscribed halls available only to first-years, while most students pay significantly more in the private rented sector. Marketing materials featuring halls and campus living are potentially misleading if most students spend most of their degree in private accommodation of significantly lower quality at higher cost.

    Even a university in a notably expensive area that makes living costs look lower than they really are in its marketing may be committing a misleading omission – and OfS’ Condition C5 reinforces this by covering:

    …anything individuals may rely on in their decision making about whether (or what) to study at the provider.

    What happens now

    The unfair commercial practices provisions of the DMCC Act came into force on 6 April 2025. This is not prospective regulation – it applies now. The CMA has indicated it will update its sector-specific guidance in light of the new Act, but no timetable has been given for HE – and the absence of sector-specific guidance does not provide a grace period.

    The CMA now has direct enforcement powers under the DMCC Act. It doesn’t need to go to court to determine that an infringement has occurred – it can make that determination itself and impose financial penalties directly on businesses and individuals. The reputational and financial exposure for non-compliance has increased substantially.

    There will be some in the sector suggesting this is all rather tiresome – more compliance burden when universities should be focused on teaching and research or restructuring for survival. Sure, sure – but for me, that response misses the point.

    Consider what the current system asks of applicants. A 17-year-old browsing a website is expected to notice that £9,535 is a Year 1 figure, intuit that fees will rise annually, locate the relevant inflation mechanism buried in terms and conditions, run compound calculations across three or four years, and identify which “additional course costs” are genuinely optional versus effectively mandatory – all while simultaneously choosing A-levels and writing personal statements.

    It’s not a reasonable expectation. It’s a system designed by people who understand it for people who don’t, and the information asymmetry falls hardest on exactly the students who can least afford to get it wrong – first-generation applicants without family knowledge to draw on, international students navigating an unfamiliar system from thousands of miles away, young people from disadvantaged backgrounds with no financial buffer for unexpected costs.

    I’m no lawyer, and some of the above might not turn out to be technically required, but it seems to me that the point here isn’t to do the bare minimum to stay on the right side of the CMA, or in England, OfS.

    It’s to recognise that when you transfer the cost of higher education onto students and graduates – when you ask them to take on £30,000, £50,000, £80,000 of debt for a degree – you take on a corresponding obligation to help them understand what they’re buying and what they’ll pay. That means straining every sinew to make pricing clear, not hunting for loopholes that let you technically comply while keeping the complexity intact.

    In other words, however much of a pain in the arse it is, transparency isn’t bureaucratic overreach. It’s just what fairness looks like when you write it down.

    Source link

  • Budget 2025 for universities and students

    Budget 2025 for universities and students

    There’s not generally a lot for higher education in the chancellor of the exchequer’s annual budget statement – but this year marks an exception.

    We were expecting further details of two policies first announced earlier this year – a levy on international student fee income, and the promised return of maintenance grants for students from deprived backgrounds studying priority subjects.

    Though the return of grants (even in a very limited form) was welcomed by students and the sector, the levy has been the focus of sustained lobbying from providers struggling to balance their books with the one area of income that has sustainably grown over recent years.

    The budget also provides a few other unwelcome surprises – thresholds and interest rates have been frozen for plan 2 loan repayments (those made by the majority of recent graduates) until 2029-30, meaning that graduates will pay more. A tweak to pension salary sacrifices may make it even more expensive for some providers to employ staff. And the looming threat of a mammoth schools SEND debt being covered by departmental expenditure means that every area of education spending is likely to face pressure from 2027-28.

    But it is the fee uplift for the next two years that is likely to get most attention.

    Fee uplift

    The higher rate for tuition fee loan caps will rise, as announced, in both of the next two academic years – to £9,790 a year in 2026-27 and up to £10,050 for 2027-28, with other statutory caps (including for classroom-based foundation years) rising in lockstep. These are expected to be the final two rises that apply to all providers – primary legislation will be laid that means future fee cap rises will be linked to the Office for Students’ revised teaching excellence framework.

    It should also be noted that these are per year amounts, not the per credit amounts that the (as-yet unenacted) Lifelong Learning (Higher Education Fee Limits) Act allows the government to set – this is interesting as the entire funding system is due to move to a per credit basis (to allow for the Lifelong Learning Entitlement’s modular approach to study) from 2026.

    While this decision has been widely trailed by the minister as evidence of her department addressing the financial problems faced by universities, it should be noted that both increases are (as usual) by OBR projections of interest rates which may differ from the actual interest rates. The rise of what is widely seen as the default tuition fee to north of £10,000 in 2027-28 is likely to trigger widespread commentary – if you believe the stories from the coalition years the original £9,000 figure was chosen precisely to avoid being above what was seen as a psychologically important £10,000 sticker price.

    Here’s how that breaks down for all of the common fee caps:

    Fee caps 2025-26 2026-27 2027-28
    With TEF and APP (FT) £9,535 £9,790 £10,050
    With TEF and APP (PT) £7,145 £7,335 £7,530
    With TEF and APP (Accel) £11,440 £11,750 £12,060
    With APP only (FT) £9,275 £9,525 £9,780
    With TEF only (FT £6,355 £6,525 £6,695
    With neither TEF nor APP (FT) £6,185 £6,350 £6,520

    International student levy

    We were expecting details of the international fee levy first announced in the immigration white paper – and these arrived via a consultation with a closing date of 18 February 2026.

    The proposal is that from August 2028, the levy on international student fee income has been set at a flat rate of £925 per student (rising by inflation in following years), with the first 220 students entirely exempt. It is estimated that this will generate around £445m in 2028-29, equivalent to around 4.5 per cent of total international fee income across the sector. However DfE estimates that the sector would lose £270m for that year (equivalent to around 3 per cent of international fee income), suggesting that more than half of the cost of the levy would be passed on to students, given that the same estimates suggest 14,000 less students would come to the UK to study in that year.

    Importantly, “international students” are defined as those who are registered for study during the year in question (excepting those who leave during the contractually protected first two weeks of study). Transnational provision, and provision at further education colleges below level 3, will not be in scope. And the system will be run by the Office for Students – there’s even an option to pay the levy quarterly by direct debit.

    The impact analysis notes that the levy will – unsurprisingly – reduce the ability of the sector to cross subsidise domestic teaching or research from international fee, but we are reminded that this is before accounting for any reinvestment of the levy in the sector, and before accounting for the rise in domestic tuition fees (though as fee rises are linked, nominally at least, to inflation that last one is a little disingenuous.

    The effect of a flat fee, as opposed to the blanket 6 per cent of international fee income levy first proposed in the annex to the immigration white paper, is to decrease the impact on providers who are able to charge higher fees per student. The “free” 220 students will keep many smaller specialist providers out of the levy entirely, meaning that proportionally more costs will fall on providers who attract large numbers of international students with lower fees.

     

    [Full screen]

    While the University of Suffolk will lose nearly 14 per cent of international fee income to the levy(on 750 students) and the University of Huddersfield will lose 9.3 per cent, the University of Cambridge will lose just 2.69 per cent (on 7,315 students). The practical impact of the proposal will be that providers that are more likely to be drawing substantial parts of their operating income from international fees (and those more likely to be enrolling students with disadvantaged backgrounds) will be hit hardest. The charts in this article will help you compare this outcome with proportional models like the initial 6 per cent proposal.

    We are not given a rationale for this change of approach, but it is fair to assume an active policy decision – to minimise the impact on those that make the most from international fees – based on soft power and international standing. It is a form of specialisation, perhaps.

    Maintenance grants

    Pretty much confirming that the policy on maintenance loans was back-of-a-fag-packet for Conference stuff, the documents collectively hide how much of the levy will be spent on the new maintenance grants. What we do know is that they’re coming in 2028-29, will be available to both new students and those already studying, and will be paid on top of maintenance loans.

    The amounts will be means-tested – students from households earning at or below £25,000 will get the maximum (£1,000 in years one and two, £750 from year three onwards), tapering to £500/£375 for those with household incomes up to £30,000. The higher amounts in early years are designed to help with “access and initial progression”, but in reality it’s a cliff edge that hits students from care-experienced backgrounds particularly hard.

    That doesn’t give us a total – grants will only be available for certain subjects aligned with the government’s economic priorities and Industrial Strategy. How many students there are left on a residual household income of 25k or less by 2018 is also not outlined. The eligible subject list hasn’t been confirmed – it’ll be informed by Skills England’s work on skills needs and may align with LLE priority funding categories. And students will need to be studying at least 120 credits per year (or full-time under current arrangements) to be eligible.

    Maintenance loans

    As (maximum) UG fees rise by projected inflation, so does maximum maintenance (and the PG loan schemes) by the OBR projection for Q1 2027 of 2.7 per cent. Of course the OBR has been wrong before, and may be wrong again – this year’s 3.1 per cent increase (based on Q1 2026) now shows up as 4.1 per cent in revised OBR forecasts, an error that nobody goes on to fix and so compounds in its impact over time.

    In addition, there’s no sign of that parental (residual household) income threshold for parents chipping in changing either – and now that the minimum wage is firmly over £25,000, will almost certainly mean a collapse off a cliff in the number of students able to access the maximum. This year DfE’s own estimates reckon that a maximum loan increase of 3.1 per cent will only result in an average loan increase of 2.6 per cent – expect (much) more of that by the end of the Parliament.

    While we’re on parental contributions, buried in the documents is another nasty sting. Right now, if you have two kids at university at the same time, the system recognises that your money has to stretch, and works out a “parental contribution” based on your household income, then splits that between the two students. So if the calculation says “this family can afford to put in £2,000”, and you have two undergrads, the system assumes roughly £1,000 per child – and each student’s maintenance loan is a bit higher to reflect that you are not magically doubling your contribution.

    It turns out that the LLE change will mean the SLC stops doing that split for people on the new LLE-style maintenance – each young person’s maintenance will be worked out on the household income as if they were the only one studying. So using the same example, the system would effectively assume you can contribute £2,000 to Child A and £2,000 to Child B. It’s “simpler” because in a modular, on-off, part-time LLE world the SLC will no longer have to track who else in the family is studying and constantly recalculate the split.

    But for a “traditional” family with two young full-time undergrads at the same time, it quietly removes a small protection you currently get when more than one child is in higher education.

    Plan 2 threshold freeze

    You might remember, back in the Summer of 2023, when Bridget Phillipson was touring the studios to declare that graduates will pay less under a Labour government:

    Reworking the present system gives scope for a month-on-month tax cut for graduates, putting money back in people’s pockets when they most need it. For young graduates this will give them breathing space at the start of their working lives and as they bring up families. This is a choice that the Tories could be making now to deliver a better, fairer system for our graduates and for our universities…. Labour will not be increasing government spending on this.

    There was never a detailed explanation of how that magic trick would be pulled off – although it was likely to have been based on London Economics’ stepped repayment modelling, which depended in part on the reintroduction of real interest rates post-graduation (between 0 per cent and 2 per cent) for graduates with earnings between £27,571 and £57,570.

    Either way – at least for Plan 2 borrowers – the budget very much breaks that pledge. For anyone who started a degree between 2012 and 2022, the repayment threshold will be frozen at £29,385 in cash terms for three years from April 2027. Instead of that threshold rising with prices or earnings, it just sits there while wages (hopefully) go up – which means more graduates crossing the line into repayment sooner, and those already repaying handing over a bigger slice of their real income than they would have done otherwise.

    It’s very much a stealth extra tax on graduates layered on top of already frozen income tax and National Insurance thresholds, and it shifts (even) more of the cost of the system away from the state and onto a cohort who have already endured one round of threshold suppression under Michelle Donelan’s “fairer sharing of the burden” reforms, have watched the “deal” they signed up to being repeatedly tweaked after the fact, and had been led to expect a “month-on-month tax cut” rather than another quiet squeeze.

    The Treasury’s justification consciously echoes Donelan’s line about graduate earnings premiums and fairness to non-graduates, but in practice this looks less like a principled reset of student finance and more like a return to the same playbook – using Plan 2 borrowers as a handy, captive tax base until the reality shows up on their payslips. For Reeves, it generates £285m in 2025-26, a big £5,915m “gain” in 2026-27 (that’s mainly the accounting revaluation of the loan book, not cash), then £255m in 2027-28, £290m in 2028-29, £355m in 2029-30 and £380m in 2030-31.

    Wider measures for students

    Rising National Living Wage and youth rates mean a substantial chunk of full-time students working in hospitality, retail and care will see higher hourly pay, although given the volume of jobs lost in these sectors in recent years (with similar warnings from those industries overnight), they’ll need to find a job first.

    The creation of a “Fair Work Agency” with explicit focus on enforcement in “high-risk” sectors is also, if successful, is likely to impact on international student incomes in a way that few like to talk about, but pretty much everybody knows (working more than 20 hours a week, cash in hand, with no rights).

    Extending the £3 bus fare cap will help, holding prescription charges steady all keep day-to-day pressure in shared student houses and commuter budgets a little lower than it would otherwise be, and taking around £150 off the average energy bill by shifting decarbonisation costs off bills and onto general spending won’t matter much given “all-inclusive” bills in halls and HMOs.

    Free emergency contraception in pharmacies closes an obvious gap in sexual health provision for a very student-heavy age group, while the cap on ticket resale prices cuts straight across the live events market some students use.

    Add all the measures up, and you might expect student poverty to show up in the annual release of the distributional impact on households analysis that gets produced to accompany budget day – but alas it remains the case that tuition fee loans show up as household income in the DWP’s Households below average income (HBAI) statistics, which means that the increase in maximum fees will see an HMO with 5 students in it looking 50k better off than they really are.

    Other bits

    The chancellor capped national insurance contribution exemptions for salary sacrifice into pensions at £2,000 – employees who pay more than this amount each year into pensions will need to account for employer national insurance contributions on additional amounts. A note from sector employers association UCEA before the budget reminded the Treasury that this approach is widely used by universities, and calculated that a cap could cost individual USS institutions an additional £1-3m each year with a total cost to the sector north of £50m – and there are going to be impacts relating to other pension schemes too.

    One of the biggest current issues with the wider education budget, and one that has pushed many local councils towards bankruptcy, is the rapidly rising cost of school provision and other support for pupils with special educational needs (SEND). Currently the costs of this provision are nominally covered by local councils, but are subject to a statutory override which means that the sums involved are not included within council deficit calculations. The budget confirms the June announcement that this arrangement will end from 2027-28, with costs (due to hit around £5bn) covered from that point within departmental expenditure limits.

    This has a clear impact on other areas of government spending, and if the Department for Education is to be made responsible it is likely that at least some of this funding will have to be found via cuts to other budgets, including for tertiary education.

    Source link

  • Five challenges faced by the Welsh tertiary sector

    Five challenges faced by the Welsh tertiary sector

    Wales’ tertiary education and research sector is something we should all be proud of.

    This is why I want to ensure it not only remains sustainable but continues to build on the achievements of the past five years.

    These achievements include our progressive higher education funding policy, which has ensured financial barriers do not hold back talent and ambition. Welsh full-time undergraduates studying away from home outside London are entitled to £12,345 in maintenance support, with up to £8,100 in grants for those from the lowest income household.

    Our financial package for part-time study has opened higher education to thousands more students since 2018.

    Welsh universities led the UK for the proportion of their research whose impact is considered internationally excellent or world-leading in REF 2021.

    The pandemic had a tremendous impact on every aspect of education, but the tide has started to turn. Further education has seen a revival in participation in recent years, helped by increased funding for colleges and the continuation of the Education Maintenance Grant and Welsh Government Learning Grant. Last year there was an 8.5 per cent increase in school leavers progressing to college and it is promising that early data suggests a similar increase this year.

    A time of challenges

    But I am mindful that there are significant challenges facing tertiary education, not just in Wales, but across the UK.

    Yesterday in the Senedd I set out what I believe are now the five most pressing challenges for higher and further education in Wales in the coming years, and how I will use the remainder of the Senedd term to work with the sector to address them.

    Increasing participation must continue to be a priority. Wales has a smaller proportion of young people attaining level 3 (A Levels and equivalent) than other UK nations. Our higher education entry rate at age 18 is also the lowest in the UK at 30 per cent, and although a larger proportion of students appear to enter HE in Wales in their twenties, we want more to see university as part of their future at 18.

    The Welsh Government has a long-standing goal of 75 per cent of working age people being qualified to level 3 or higher by 2050. To achieve this, we need to expand access to a full range of vocational, technical, and academic pathways from age 16, which is why we are already reforming both 14-16 and post-16 qualifications.

    And our tertiary education sector must be ready for a significant decline in the numbers of young people. The number of 16-year-olds in Wales is expected to fall by 17 per cent between 2027 and 2037. As a result, demand for university places across the UK could fall by almost 20 per cent in the 2030s.

    Lifelong learning is already well ingrained in Welsh higher education. In 2022-23, 36 per cent of Welsh students studied part-time, compared with 23 per cent of English students, and 44 per cent of Welsh students were aged 25 and above compared with 36 per cent of English students. And during this Senedd term we have been able to increase the numbers of part-time learners in further education for the first time in a decade.

    This is a platform to build from, but we will need to go further to enable adults to upskill around work and family commitments, at all levels, by providing more flexible, part-time and lifelong learning opportunities.

    Unintended consequences

    Another challenge relates to the unintended consequences of growing competition between providers. The competition in student recruitment is fundamental to the financial challenges now facing our universities and it will only intensify from 2030.

    The removal of student number caps has permitted some UK universities to grow their domestic enrolments – often by lowering entry requirements – at the expense of the rest of the sector, including many of our excellent universities here in Wales. A future where higher-tariff providers continue to expand their enrolments at the rate of the past few years cannot be sustainable for the wider UK sector.

    So I agree with the UK Government’s white paper that the future for tertiary education lies not in greater competition, but in increased collaboration. We have already worked with the Competitions and Markets Authority (CMA) to clarify the position on collaboration between universities. Medr is working to map subject provision so we can better understand which subjects may be at risk in the future from growing competition and changes in student preferences. Now we must look at how we enable closer collaboration in practice, and create the right incentives in funding and regulation for institutions to act more collaboratively.

    I believe working in partnership will also be key to addressing the financial challenges facing not only institutions, but also students.

    Our financial support for tertiary education and students is significant, totalling over £1.2bn this year alone. Despite taking the difficult decision to increase tuition fees in the past two years and again next year, education must remain affordable. This is why we provide generous student support and a more progressive repayment policy in Wales. We will therefore consider cost-of-living pressures for students and learners in the ongoing evaluation of the Diamond reforms. But the challenges facing the public finances are likely to last, and we need to consider how every penny spent to support institutions and students is delivering the greatest value possible.

    Delivery

    Finally, a thriving tertiary education sector must deliver for our economy. There are already excellent examples of this – such as the role of Cardiff University to support the compound semiconductor manufacturing hub, or the work of the North Wales Tertiary Alliance to power the new reactors at Wylfa with a skilled workforce. But we will need to change our approaches to vocational skills and research and innovation, both to respond to UK Government reforms, and to ensure that our economy has the skills and ideas to boost productivity and reduce inequality.

    We have begun some of the work needed to meet these five challenges but must go further. In the coming weeks, we will publish an evidence paper, alongside a call for submissions from stakeholders, which will set out the challenges in much greater depth, and call on the sector to comment and advise on what more we need to understand about them.

    I have also invited representatives from across the Welsh sector to join a new Ministerial Advisory Group, to consider these challenges in depth and in the spirit of social partnership.

    Together, this work will provide a comprehensive evidence base upon which to deliver further reform, and help us to secure a thriving future for our tertiary education sector in Wales in these challenging times.

    Source link

  • A government running out of road still sets the economic weather for higher education

    A government running out of road still sets the economic weather for higher education

    For a party that it’s become fashionable to criticise for failing to have prepared for power, Labour has in fact set an awful lot of ambitious policy machinery into motion over the last 16 months.

    There’s barely been a month go by without some large-scale reform to how the country is governed, organised, and understood as a sum of diverse parts and competing pressures, and we’ve had our work cut out thinking through the implications of each for the higher education sector: from devolution to industrial strategy, from health reform to an explicit tying together of skills and migration (which has barely got started yet), from a new communities strategy to belatedly moving skills policy to the Department for Work and Pensions.

    Whatever your views on the merits and mechanics of these, and the many other initiatives that different departments have launched, they are all downright interesting – and pose a plethora of questions for how higher education fits in and demonstrates value.

    But all need time. The overall ambitions of devolution are still on their starting blocks as councils pitch their ideas for new geographies; the industrial strategy was explicitly badged as bearing fruit in 2035; the NHS workforce plan that should really have been alongside the 10-year health plan has been delayed to the spring – and so on and so on. No-one involved in pulling together all these long-term reforms did so under the assumption that all the pieces would be in place within one parliamentary term.

    Yet here we now are, with the commentariat consensus being that both Keir Starmer and Rachel Reeves are toast, and public sentiment pointing emphatically in that direction as well – though this is not to say the party cannot regain momentum under a new leader. The sector is already asking questions about how to prepare for a Reform government (as discussed in the most recent instalment of our new HE Influence newsletter, I should mention).

    The post-16 white paper presented a somewhat upbeat vision of what the government would like higher education’s role to feel like across the country, but was weaker on any kind of immediate reform, proposing instead that traditionally glacial changes to research funding, a piece-by-piece strengthening of the Office for Students’ remit, and putting FE, HE and business in the same room would do much of the heavy lifting, given time and goodwill.

    All this feels like a recipe for the sector to retreat to more comfortable home territory over the next few years, fighting battles over the international student levy, the size of teaching grants, and the shape of the REF, and gradually giving up on pushing for a central role in the government’s overall vision for the country, given the increasing probability that dreams like a planned and unswerving industrial strategy will all be swept away in 2029.

    Quite what’s to be done about all this is a question for another day – with the Budget looming on Wednesday, and admittedly still three and a half years in office remaining for Labour, the other thing that’s worth reflecting on is quite how much the choices the Chancellor makes around tax, public spending, debt, and general macroeconomics will determine the success – or otherwise – of higher education institutions in England over the next few years. These big tickets items all impact the sector deeply, however much the temptation might be to throw one’s hands up in the air, snipe about a “tax” on overseas recruitment, and start looking at what opposition parties can be convinced of.

    Labour on labour

    There’s a pretty strong case to be made for the most consequential policy decision for universities since Labour came to power being the decision to hike employer national insurance contributions in last autumn’s budget. Clearly it has cost universities a small fortune, and the move also sucked up a sizeable slice of the government’s various funding “boosts” for schools and FE colleges – and the NHS and elsewhere – leaving less putative generosity to go around.

    But perhaps most importantly of all, the ENICs rise has decimated the labour market for young people – in the court of public opinion at least – by making new hires and part-time workers more expensive, all while AI is supposedly making them obsolete.

    The result is that university graduates – and the institutions ever more judged on those graduates’ success – are seen to be in a right old state. The Guardian was the latest to take a run at this last week, with tales of qualified grads banging their heads against the job application wall, accompanied by analysis from the paper demonstrating that almost half of all jobs lost since Labour came to power were among the under-25s. Down in the small print we see that this is driven almost entirely via reduced employment of 16- and 17-year-olds, but the vibes aren’t good, even if less hyperbolic analysis from the likes of the Institute of Student Employers and Prospects Luminate paints merely a concerning, rather than cataclysmic, picture.

    The sad fact is that, longer term, this deluge of negative publicity about the value of a degree – alongside a necessary tailing off of the supposed “graduate premium” as a viable sector talking point as the minimum wage heads ever up – will inevitably move from being fodder for anti-HE journalists to actually driving changes in young people’s decision-making (even if a tight jobs market in the short-term often pushes graduates back towards postgraduate study) and scar the sector’s ability to make its case for its value.

    The result is that keeping a watchful eye on Labour’s economic moves around the costs associated with employment – both on Wednesday and beyond – has become a matter of some importance for higher education. Further increases in the national living wage over the next few years, lower-profile changes to business taxation, and even wildcards like any surprise revenue-raising changes to the growth and skills levy, all hold the possibility of making this problem worse. All while leading to higher costs for universities and making it harder for students to work alongside their studies, despite this being ever more necessary.

    Pound in pocket

    Rachel Reeves finally taking the plunge with an income tax rise, as a good proportion of the Labour backbenches were calling for, seems to have definitively fallen off the table for the Budget – with a handful of consequences worth noting for the sector.

    First, it will almost certainly mean that future spring and autumn statements will be equally fraught, as the Treasury fails to leave clear blue water between its spending plans and its spending rules. By not maintaining a sensible “headroom”, public finances will remain permanently at the mercy of external shocks and OBR downgrades, and we’ll probably be back here in less than six months’ time wondering what levers will need to be pulled. At least at some point in the Parliament, said levers will end up being haircuts to departmental budgets rather than new taxes or further borrowing.

    Following on from this, the use of a basket of smaller revenue-raising measures to partially fill the gap left by not raising income tax increases the likelihood that this shortfall gets filled by employment-related measures – that is, all the issues we’ve been over above, which have serious consequences for universities as large employers who are not quite in the public sector (as may be the case this week if rumoured changes to salary sacrifice rules go ahead).

    And the other effect that an income tax rise would have achieved, which the “smorgasbord” approach will not to the same extent, is bringing down inflation.

    Inflation is arguably the most serious financial threat that higher education institutions face. Even if many within the sector, both in internal conversations and public pronouncements, are often quite happy to let audiences believe that measures like the dependants ban are what’s most responsible for blowing a hole in HE finances, the fundamentals weren’t sound even before the post-pandemic recruitment glut.

    While tuition fees and maintenance loans in England (and, at least for one year, Wales) are now linked to inflation, or more precisely to inflation forecasts – Office for Budget Responsibility predictions on Wednesday will set the levels for 2026–27 – the idea of any measures to compensate for all the shortfalls baked in over several years of rocketing price rises appears to have been permanently nixed.

    And it’s worth bearing in mind that the index link does not mean that either student maintenance or teaching funding will actually keep pace with inflation in the coming years. For one thing, OBR forecasts have repeatedly underestimated inflation, and there’s no corrective mechanism in the system. For student maintenance, even if predictions come true, other features of the system mean that the average, rather than maximum, maintenance loan continues to be worth less each year.

    For teaching funding, it’s important to stress that Labour has in no way committed to keeping the overall package inflation-proofed. While tuition fees are the major part here, other elements such as high-cost subject funding took a real-terms tumble this year, and no-one is predicting that the reforming the Strategic Priorities Grant means upward movement on how much it’s worth – the reverse is far likelier, given DfE’s commitments elsewhere.

    University staff have had a decade or more of below inflation pay rises, and there doesn’t seem any serious capacity or appetite among higher education employers to do fundamental work here – the year-on-year squabbles will continue, and high levels of inflation over the coming years will eat further into staff remuneration and the attractiveness of higher education careers.

    And inflation-linked rises in tuition fees will also change applicant behaviour. One thing we’ll start getting a sense of on Wednesday will be the likelihood of when fees will cross the (supposedly) psychologically important barrier of £10,000. Back in March, the OBR was expecting RPIX to run at 2.7 per cent in Q1 2027, and 2.8 per cent in Q1 2028, which would lead to tuition fee caps of around £9,790 in 2026–27 and around £10,065 in 2027–28. We won’t know for certain until autumn 2026, but the picture will start to come into focus.

    Now the significance of fees being materially above, rather than roughly equal to, £10k is perhaps overstated. But DfE isn’t really sure – it has reportedly commissioned modelling on how students will respond to rises, but the results aren’t due until the spring.

    All in all, there’s a whole host of reasons why Budget decisions and their effect on inflation, as well as the OBR forecasts themselves, have become heavily intertwined with the future behaviour and wellbeing of higher education staff and students.

    Gilt trips

    Perhaps the most overlooked publication of the last few years for really understanding how the Treasury thinks about higher education is the Institute for Fiscal Studies analysis of how the interplay between interest rates and Treasury gilts affect the cost of student loans.

    In a nutshell, it costs far more for the government to borrow than it used to (the 15-year gilt yield has continued to rise since the IFS did its sums in January 2024), and so it’s very reluctant to allow for too much expansion in the student loan book – it’s a far cry from when the broad strokes of student finance were put in place by the coalition government, and this was basically thought of as free money.

    This goes a long way to explain why the government is so reticent to use the student loan book in any radical way – and thus we see things like a real-terms freeze in tuition fees being presented as if it’s an almost saint-like act of generosity to the sector, or the foundering of DfE’s tepid-but-probably-genuine desire to properly boost maintenance loans.

    We’re waiting for the specifics (hopefully) of maintenance grant implementation on Wednesday, but the cost of government borrowing feels like it has played a role in the last year of behind-the-scenes policy deliberations here. In the run-up to last autumn’s Budget, there was plenty of speculation, and government nods to the press, about the potential for movement on the overall maintenance package and grants in particular. Clearly the battle with the Treasury was lost, and DfE was told to come up with an alternate source of funding – hence the international student levy. What we don’t yet know is to what extent grants will replace, rather than supplement, loans – if what we see is a switch from one to the other, the expense to the public purse of borrowing is a likely primary driver, especially given the hidden costs associated with annual tuition fee rises. While the sector isn’t really getting any more money in real terms, this isn’t to say that the government’s finances are not being stretched by indexing fees.

    What this all means is that, unfortunately, the sector needs to keep an eye on the gilts market. The supposed flip-flop on raising income tax has already done some damage here, and the government repeatedly needing to borrow more than it expected to is another issue. There’s a wider question of perceived government competence around balancing the books that drives behaviour too – confidence is in short supply as it is, and it will get worse if the Starmer era implodes. This all equates to longer-term uncertainty about the use of the student loan book.

    Even if you’ve given up on the Labour government in its current form, and are pinning hopes on a future government being more receptive to calls for support and investment in both universities and students, Number 10 and the current Treasury team are still setting the economic weather. While much of the sector will be waiting for the moment Rachel Reeves stops speaking on Wednesday to see the fee levy policy paper – assuming there is one, and the can doesn’t get kicked – there are many reasons to think the wider public finances are a much more important determinant of the future of higher education. And it’s one that isn’t painting a particularly cheery picture at the moment.

    Source link

  • The white paper is wrong – changing research funding won’t change teaching

    The white paper is wrong – changing research funding won’t change teaching

    The Post-16 education and skills white paper might not have a lot of specifics in it but it does mostly make sense.

    The government’s diagnosis is that the homogeneity of sector outputs is a barrier to growth. Their view, emerging from the industrial strategy, is that it is an inefficient use of public resources to have organisations doing the same things in the same places. The ideal is specialisation where universities concentrate on the things they are best at.

    There are different kinds of nudges to achieve this goal. One is the suggestion that the REF could more closely align to the government missions. The detail is not there but it is possible to see how impact could be made to be about economic growth or funding could be shifted more toward applied work. There is a suggestion that research funding should consider the potential of places (maybe that could lead to some regional multipliers who knows). And there are already announced steps around the reform on HEIF and new support for spin-outs.

    Ecosystems

    All of these things might help but they will not be enough to fundamentally change the research ecosystem. If the incentives stay broadly the same researchers and universities will continue to do broadly the same things irrespective of how much the government wants more research aimed at growing the economy.

    The potentially biggest reform has the smallest amount of detail. The paper states

    We will incentivise this specialisation and collaboration through research funding reform. By incentivising a more strategic distribution of research activity across the sector, we can ensure that funding is used effectively and that institutions are empowered to build deep expertise in areas where they can lead. This may mean a more focused volume of research, delivered with higher-quality, better cost recovery, and stronger alignment to short- and long-term national priorities. Given the close link between research and teaching, we expect these changes to support more specialised and high quality teaching provision as well.

    The implication here is that if research funding is allocated differently then providers will choose to specialise their teaching because research and teaching are linked. Before we get to whether there is a link between research funding and teaching (spoiler there is not) it is worth unpacking two other implications here.

    The first is that the “strategic distribution” element will have entirely different impacts depending on what the strategy is and what the distribution mechanism is. The paper states that there could, broadly, be three kinds of providers. Teaching only, teaching with applied research, and research institutions (who presumably also do teaching.) The strategy is to allow providers to focus on their strengths but the problem is it is entirely unclear which strengths or how they will be measured. For example, there are some researchers that are doing research which is economically impactful but perhaps not the most academically ground breaking. Presumably this is not the activity which the government would wish to deprioritise but could be if measured by current metrics. It also doesn’t explain how providers with pockets of research excellence within an overall weaker research profile could maintain their research infrastructure.

    The white paper suggests that the sector should focus on fewer but better funded research projects. This makes sense if the aim is to improve the cost recovery on individual research projects but improving the unit of resource through concentrating the overall allocation won’t necessarily improve financial sustainability of research generally. A strategic decision to align research funding more with the industrial strategy would leave some providers exposed. A strategic decision to invest in research potential not research performance would harm others. A focus on regions, or London, or excellence wherever it may be, would have a different impact. The distribution mechanism is a second order question to the overall strategy which has not yet dealt with some difficult trade offs

    On its own terms it also seems research funding is not a good indicator of teaching specialism.

    Incentives

    When the White Paper suggests that the government can “incentivise specialisation and collaboration through research funding reform”, it is worth asking what – if any – links there currently are between research funding and teaching provision.

    There’s two ways we can look at this. The first version looks at current research income from the UK government to each provider(either directly, or via UKRI) by cost centre – and compares that to the students (FTE) associated with that cost centre within a provider.

     

    [Full screen]

    We’re at a low resolution – this split of students isn’t filterable by level or mode of study, and finances are sometimes corrected after the initial publication (we’ve looked at 2021-22 to remove this issue). You can look at each cost centre to see if there is a relationship between the volume of government research funding and student FTE – and in all honesty there isn’t much of one in most cases.

    If you think about it, that’s kind of a surprise – surely a larger department would have more of both? – but there are some providers who are clearly known for having high quality research as opposed to large numbers of students.

    So to build quality into our thinking we turn to the REF results (we know that there is generally a good correlation between REF outcomes and research income).

    Our problem here is that REF results are presented by unit of assessment – a subject grouping that maps cleanly neither to cost centres or to the CAH hierarchy used more commonly in student data (for more on the wild world of subject classifications, DK has you covered). This is by design of course – an academic with training in biosciences may well live in the biosciences department and the biosciences cost centre, but there is nothing to stop them researching how biosciences is taught (outputs of which might be returned to the Education cost centre).

    What has been done here is a custom mapping at CAH3 level between subjects students are studying and REF2021 submissions – the axis are student headcount (you can filter by mode and level, and choose whichever academic year you fancy looking at) against the FTE of staff submitted to REF2021 – with a darker blue blob showing a greater proportion of the submission rated as 4* in the REF (there’s a filter at the bottom if you want to look at just high performing departments).

    [Full screen]

    Again, correlations are very hard to come by (if you want you can look at a chart for a single provider across all units of assessment). It’s almost as if research doesn’t bring in money that can cross-subsidise teaching, which will come as no surprise to anyone who has ever worked in higher education.

    Specialisation

    The government’s vision for higher education is clear. Universities should specialise and universities that focus on economic growth should be rewarded. The mechanisms to achieve it feel, frankly, like a mix of things that have already been announced and new measures that are divorced from the reality of the financial incentives universities work under.

    The white paper has assiduously ducked laying out some of the trade-offs and losers in the new system. Without this the government cannot set priorities and if it does not move some of the underlying incentives on student funding, regional funding distribution, greater devolution, supply-side spending like Freeports, staff reward and recognition, student number allocations, or the myriad of things that make up the basis of the university funding settlement, it has little hope of achieving its goals in specialisation or growth.

    Source link

  • A joined up post-16 system requires system-level thinking combined with local action

    A joined up post-16 system requires system-level thinking combined with local action

    There have been so many conversations and speculations and recommendations aired about the forthcoming post-16 skills and education white paper that you’d be forgiven for thinking it already had been published months ago.

    But no, it’s expected this week some time – possibly as early as Monday – and so for everyone’s sanity it’s worth rehearsing some of the framing drivers and intentions behind it, clearing the deck before the thing finally arrives and we start digesting the policy detail.

    The policy ambition is clear: a coherent and coordinated post-16 “tertiary” sector in England, that offers viable pathways to young people and adult learners through the various levels of education and into employment, contributing to economic growth through providing the skilled individuals the country needs.

    The political challenge is also real: with Reform snapping at Labour’s heels, the belief that the UK can “grow its own” skills, and offer opportunity and the prospect of economic security to its young people across the country must become embedded in the national psyche if the government is to see off the threat.

    The politics and policy combine in the Prime Minister’s announcement at Labour Party Conference of an eye-catching new target for two thirds of young people to participate in some form of higher-level learning. That positions next week’s white paper as a longer term systemic shift rather than, say, a strategy for tackling youth unemployment in this parliament – though it’s clear there is also an ambition for the two to go hand in hand, with skills policy now sitting across both DfE and DWP.

    Insert tab a into slot b

    The aspiration to achieve a more joined up and functioning system is laudable – in the best of all possible worlds steering a middle course between the worst excesses and predatory behaviours of the free market, and an overly controlling hand from Whitehall. But the more you try to unpick what’s happening right now, the more you see how fragmented the current “system” is, with incentives and accountabilities all over the place. That’s why you can have brilliant FE and HE institutions delivering life-changing education opportunities, at the same time as the system as a whole seems to be grinding its gears.

    Last week, a report from the Association of Colleges and Universities UK Delivering a joined-up post-16 skills system showcased some of the really great regional collaborations already in place between FE colleges and universities, and also set out some of the barriers to collaboration including financial pressures causing different providers to chase the same students in the same subjects rather than strategically differentiating their offer; and different regulatory and student finance systems for different kinds of learners and qualifications creating complexity in the system.

    But it’s not only about the willingness and capability of different kinds of provider to coordinate with each other. It’s about the perennial urge of policymakers to tinker with qualifications and set up new kinds of provider creating additional complexity – and the complicating role of private training and HE provision operating “close to market” which can have a distorting effect on what “public” institutions are able to offer. It’s about the lack of join-up even within government departments, never mind across them. It’s also about the pervasiveness of the cultural dichotomy (and hierarchy) between perceptions of white-collar/professional and blue-collar/manual work, and the ill-informed class distinctions and capability-based assumptions underpinning them.

    Some of this fragmentation can be addressed through system-wide harmonisation – such as the intent through the Lifelong Learning Entitlement (LLE) to implement one system of funding for all level 4–6 courses, and bringing all courses in that group under the regulatory purview of the Office for Students. AoC and UUK have also identified a number of areas where potential overlaps could be resolved through system-wide coordination: between OfS, Skills England, and mayoral strategic authorities; between the LLE and the Growth and Skills Levy; and between local skills improvement plans and the (national) industrial strategy. It would be odd indeed if the white paper did not make provision for this kind of coordination.

    But even with efforts to coordinate and harmonise, in any system there is naturally occurring variation – in how employers in different industries are thinking about, reporting, and investing in skills, and at what levels, in the expectations and tolerance of different prospective students for study load, learning environment, scale of the costs of learning, and support needs, and in the relationship between a place, its economy and its people. The implications of those variations are best understood by the people who are closest to the problem.

    The future is emergent

    Complex systems have emergent properties, ie the stuff that happens because lots of actors responded to the world as they saw it but that could not necessarily have been predicted. Policy is always generating unforeseen outcomes. And it doesn’t matter how many data wonks and uber-brains you have in the Civil Service, they’ll still not be able to plot every possible outcome as any given policy intervention works its way through the system.

    So for a system to work you need good quality feedback loops in which insight arrives in a timely way on the desks of responsible actors who have the capability, opportunity and motivation to adapt in light of them. In the post-16 system that’s about education and civic leaders being really good at listening to their students, their communities and to employers – and investing in quality in civic leadership (and identifying and ejecting bad apples) should be one of the ways that a post-16 skills system can be made to work.

    But good leaders need to be afforded the opportunity to decide what their response will be to the specifics of the needs they have identified and be trusted, to some degree, to act in the public interest. So from a Whitehall perspective the question the white paper needs to answer is not only how the different bits of the system ought to join up, but whether the people who are instrumental in making it work themselves have the skills, information and flexibility to take action when it inevitably doesn’t.

    Source link

  • Roll up roll up for the great higher education fire sale

    Roll up roll up for the great higher education fire sale

    Since the announcement, most eyes interested in “radical transformation” have been on the creation of a new “super-university” – Greenwich and Kent becoming the London and South East University Group.

    But The Times is reporting a very different kind of tie-up – which if it comes to pass could have much more interesting implications.

    It says that the University of Buckingham, the UK’s only “independent” university, is considering a £150 million sale to Global University Systems (GUS).

    It suggests that the potential sale could compromise the university’s Royal Charter, non-profit status, and academic integrity – risking its identity as a “free speech and research-focused institution”.

    Precedented

    If that sounds and feels “unprecedented”, you may not have noticed the extent to which everything from research parks to student accommodation are already (part or fully-)owned by private companies.

    You may also not have noticed any number of mergers, takeovers and fire sales among small private HE providers – many of which specialise in the kinds of franchised provision that have been generating considerable regulatory interest in recent months.

    There’s also Richmond, the American University in London. When founder Sir Cyril Taylor died in 2018, he bequeathed his for-profit company (American Institute for Foreign Study) to his own charitable foundation (Cyril Taylor Charitable Foundation).

    It created what former vice chancellor Lawrence Abeln called a charity “operating like a shell for a commercial company it wholly owns” – allowing commercial interests to control educational decisions through charitable structures while maintaining the appearance of independence.

    Abeln argued that the foundation used funding as leverage to demand governance changes, including his forced resignation, threatening the university’s survival unless commercial interests were satisfied.

    It mirrors concerns about the potential Buckingham sale – that once charitable educational institutions become dependent on private sector funding or ownership, academic independence becomes vulnerable to commercial priorities.

    Even when the charitable structure remains intact, the substance of independent governance can be hollowed out, creating what critics might term a “stealth privatisation” where commercial control operates behind charitable facades.

    Any number of things could be going on behind the scenes that already resemble that in universities that have breached, or are close to breaching, their banking covenants.

    But the wholescale takeover of a university with a Royal Charter? Really?

    We work at supplying HE

    Back in 2020, five men registered a UK company called “GGE UK Newco” in a WeWork near London Fields. Within four months, it had acquired university title, degree awarding powers, and registration with the Office for Students – a process that typically takes years for new higher education providers.

    The company pulled this off by purchasing the assets of the former Regent’s University London charity, including its degree awarding powers (awarded in 2012) and university title (granted in 2013). On September 29th, GGE UK Newco changed its name to “Regent’s University London Limited,” becoming the wholly-owned product of a partnership between the original Regent’s University and Galileo Global Education, a large international education provider with over 110,000 students worldwide.

    The transaction appeared to have bypassed normal regulatory processes entirely. While new providers typically wait around 180 days and must pass a Quality and Standards Review, no such review appeared to have been conducted for Regent’s University London Limited. OfS was largely silent on the specifics, raising real questions about transparency and whether standard due diligence procedures were followed.

    As DK noted at the time, the case was interesting insofar as it suggested that university titles and degree awarding powers can effectively be bought and sold as assets. With some independent providers still waiting on registration decisions, the apparent fast-tracking raised concerns about fairness and regulatory consistency, potentially setting a precedent for more financially-motivated restructuring in the sector.

    And there’s more

    Scroll forward to March 2023, when IU Group acquired the education and training activities of the London Institute of Banking and Finance through a structural split.

    The original Royal Charter charity was renamed “The London Foundation for Banking & Finance (LFBF)” and continues as a charitable foundation, while the commercial education business now operates as “LIBF Limited” (a wholly owned UK subsidiary of IU Group) trading under the original name “The London Institute of Banking & Finance.”

    That preserved the charitable Royal Charter structure while transferring the degree-awarding educational operations to private ownership.

    Then in 2014, struggling Ashridge Business School was acquired by Hult International Business School in what was described as both a merger and acquisition driven by Ashridge’s need for “financial salvation.” Hult provided a £50 million investment, and the schools completed an operational merger in 2015.

    Ashridge now operates as “Hult Ashridge Executive Education” – the executive education arm of Hult International Business School, with the historic Ashridge House estate serving as Hult’s flagship executive education campus. Unlike LIBF, this was a complete absorption rather than a structural split, with Ashridge’s independent existence ending as it became part of Hult’s global network of campuses across Boston, London, Dubai, Shanghai, San Francisco, and New York.

    And then there’s the College of Law.

    It can trace its origins to 1876 with the formation of Gibson & Weldon, a leading tutorial firm. In 1962, The Law Society created The College of Law by merging its own Law Society School of Law (founded in 1903) with Gibson & Weldon, establishing it as a specialist institution for training solicitors.

    It was formally incorporated by Royal Charter on 5 December 1975 and registered as a charity in May 1976, with the stated aim “to promote the advancement of legal education and the study of law in all its branches.” This gave it constitutional status as a chartered institution dedicated to legal education. And in 2006, it was granted degree-awarding powers by the Privy Council.

    So when it was sold to Montagu Private Equity for around £200 million in 2012, the transaction revealed just how valuable degree-awarding powers had become as tradeable assets.

    The deal involved splitting the institution – the original College of Law retained its Royal Charter and charitable status under a new Legal Education Foundation, while the commercial education business, crucially including those 2006 degree-awarding powers, moved to a newly created for-profit company called “The University of Law Limited” (originally incorporated as “Col Subco No.1 Limited”).

    DAPs, it seemed, could now be packaged and sold as part of a commercial education business – degree-awarding powers as an asset class.

    At the time, constitutional lawyers questioned how powers granted to a Royal Charter body could legitimately transfer to what was essentially a separate company. But the then responsible Department for Business, Innovation and Skills (BIS) maintained that the powers remained valid because the “whole education and training business” had moved to the new entity. The precedent was set – and so in 2015, when the University of Law was acquired by GUS, its valuable degree-awarding powers travelled with it as part of the commercial package.

    Or take Arden. Originally founded as Resource Development International (RDI) in 1990 by entrepreneur John Holden, the distance learning provider was sold to US-based Capella Education in 2011 as part of Capella’s international expansion strategy. The timing proved crucial – RDI was granted Taught Degree Awarding Powers in April 2014, gained full university status in August 2015, and was immediately put back on the market when Capella’s international strategy faltered.

    By August 2016, GUS acquired Arden for £15 million – demonstrating how rapidly degree-awarding powers could travel through corporate hands. The transaction showed DAPs functioning specifically as tradeable assets – Capella had effectively acquired a company that later gained valuable regulatory permissions, then sold those permissions onwards as part of a portfolio optimisation. For GUS, acquiring Arden provided another set of degree-awarding powers to add to its growing collection, which already included the University of Law.

    Royal charters

    But the potential Buckingham sale arguably represents a qualitatively different proposition from previous transactions. While ULaw, LIBF, Ashridge, and Richmond were specialist institutions operating in commercial-adjacent sectors – professional training, banking education, executive development, or niche international provision – Buckingham is the UK’s flagship independent university, purpose-built to demonstrate that alternatives to state higher education could thrive.

    Established in 1976 and granted its Royal Charter in 1983, Buckingham has operated successfully for over four decades as Thatcher’s “proof of concept” for educational independence. Unlike the struggling institutions that sought private sector rescue or the professional training providers that already operated in quasi-commercial spaces, in theory the sale of Buckingham would represent the commodification of the university ideal itself.

    It would also signal that even the most symbolically important Charter institutions – those created explicitly to preserve educational independence – could be subject to market forces when financial incentives align.

    Whether structured as a direct sale or following a version of a model of splitting charitable and commercial operations, a Buckingham transaction would force regulators to confront fundamental questions they’ve previously avoided. The Office for Students, the Privy Council and potentially the Charity Commission would need to justify why the commercialisation of Britain’s flagship independent university serves the public interest.

    If it happens, regardless of the technicalities of its legal structure, it would also establish that Royal Charter status provides no meaningful protection against commercialization, making virtually any institution a potential acquisition target – completing the evolution of degree-awarding powers from constitutional privileges into tradeable corporate assets.

    Back to the future

    As Mary Synge demonstrates in her analysis of university charity law regulation, universities are charities whose trustees have a fundamental legal duty to act “in the best interests of the charity” – not commercial interests, and not even student interests – at least as variously defined by politicians.

    When charitable assets and degree-awarding powers become tradeable commodities, this feels like a fundamental breach of charity law principles that have governed universities for centuries. The strategic goals of “maximising growth in income” that might benefit institutional finances are legally distinct from – and potentially in conflict with – acting in the charity’s best interests for public benefit.

    But the regulatory conditions that make the Buckingham sale possible have been deliberately created. Synge’s research shows how OfS has systematically weakened charity law oversight compared to its predecessor HEFCE, removing transparency requirements, diluting governance standards, and abandoning serious incident reporting.

    Where HEFCE demanded universities demonstrate compliance with charity law principles, OfS has reduced this to a mailing list subscription. The regulatory hollowing-out creates the conditions where transactions that should trigger intensive charity law scrutiny can proceed with minimal oversight.

    When the regulator tasked with promoting charity law compliance barely acknowledges charity law exists, constitutional protections become meaningless.

    Back to the future

    As ever, we’ve been here before – or at least the FE sector has. Back in 2016, FE Week got hold of a leaked government document that revealed the Department for Education (DfE) was actively planning for private sector acquisition of failing FE colleges.

    A draft “Framework for due diligence in the FE sector following area reviews” (a process which itself had nudged/inspired/funded a series of mergers and groups) specifically addressed the “acquisition of an FE college by a private sector organisation,” noting that private providers “may have different benchmarks and parameters as to what is acceptable in terms of both curriculum and financial performance.”

    BIS guidance published that March had already unveiled government plans to introduce an insolvency regime for colleges, explicitly stating that following area reviews, government would “no longer bail out colleges in financial trouble, but would instead allow them to go bust.” Sound familiar?

    Critics warned of potential “fire sales” where private equity firms could asset-strip college buildings and facilities, cherry-picking profitable courses while abandoning community obligations. And the University and College Union (UCU) pointed to American examples of private equity involvement leading to “derisory rates of graduation, crushing levels of debt and of course dubious value.”

    The Technical and Further Education Bill (2016) created a “Special Administration Regime” for FE – essentially corporate insolvency procedures for FE colleges with an “education objective” twist. One battle during debate on the Bill came when Labour’s Gordon Marsden attempted to protect publicly-funded college assets from private acquisition.

    Marsden argued that FE colleges represented decades of public investment – from 1950s local authority funding through the multi-billion pound Building Colleges for the Future programme – and warned that defeat would enable private equity “asset stripping” of educational institutions built with taxpayer money.

    But then Minister Robert Halfon rejected the amendment – arguing that student protection must override asset protection, even if it meant transferring publicly-funded infrastructure to private companies. When the division was called, Conservative MPs defeated the amendment 8-5, explicitly authorising education administrators to transfer college assets to private entities if deemed necessary for the “education objective.”

    It established the principle that educational assets, regardless of their public funding history, could be commodified and transferred to private ownership when market logic demanded it.

    Here in 2026, we have a Labour, not Conservative government. It is already “interested” in what’s been going on in the franchised for-profit sector. But it doesn’t seem to have been especially keen to question what’s been going on from a profit/principle point of view. And it’s not clear that what is planned in regulatory terms will be nimble enough to tackle the real questions that surround outcomes or quality.

    As is increasingly clear, the “line” between private and public interest has already been blurred by loans, accommodation, research parks and all sorts of other aspects of HE. What the government does or doesn’t do over a potential sale of Buckingham will tell us whether it’s interested in, or willing to, draw a line before the examples in blogs like this become much less obscure.

    Source link

  • The incentives don’t work they just make growth worse

    The incentives don’t work they just make growth worse

    The UK’s economy looks particularly bad at the moment.

    There is a Jeremy Hunt view of the world that while the UK is in a muddle with its money the foundations are strong. After all, the UK is still one of the world’s largest economies. There is the City AM view that the UK is in many ways fundamentally broken. And, there is the Resolution Foundation that predicts that many households will endure another decade of lost earnings.

    The UK’s particular malaise is manifold. The IFS talks about it as a result of “Low investment, policy mistakes, political instability, and Brexit,” (Covid didn’t help either). The result is what former LSE president and now advisor to Keir Starmer Minouche Shafik and founder of the Resolution Foundation Clive Cowdery have called a “toxic combination of low growth and high inequality.” Their view is stagnation is because of low records of investment in staff by business, regional inequalities, and the overplaying of the UK’s manufacturing strengths at the expense of its actual strengths in services.

    New advisor old problems

    As the country has ambled through its decade and more of low growth the university sector has expanded rapidly. As I wrote about in a paper for the Post-18 Project this presents a fundamental problem for people like me that believe in the economic utility of universities.

    The best version of the story is that universities have genuinely transformed the economic fortunes of some parts of the country, if not the entire country. A recent Centre for Cities report suggests there are some places that have become more prosperous through all the economic goods a university attracts to their place including students, knowledge workers, and some kinds of innovation.

    The second sunniest version is that the country would be in an even greater mess were it not for its universities. The gloomiest picture is that despite the enormous amount of additional public funding, increases in turnover, new research schemes, capital builds, and other fiscal levers, universities have not been able to get the country out of its fiscal funk.

    The rejoinder to this is that universities don’t just exist for reasons of economic utility. The problem is, as Jane Robinson has pointed out for Wonkhe, university’s social contract and the funding that flows to them is increasingly about how they choose to invest, the partnerships they build, the ways in which they grow their economies, and their role in regional development. Their ability to meet the challenges Shafik and Cowdery have set out is the bargain for further funding.

    This is fair enough. It is unreasonable for universities to expect more public funding in a tight economy without offering something in return. The problem is the things that universities are doing are often going under the radar and the things they might do better are often beyond their control.

    It’s not that universities don’t want to contribute to economic growth, it is that it is hard and government policy often makes it harder. To demonstrate, let’s consider Shafik’sand Cowdery’s triangle of growth; skills (as a key part of productivity), regions, and maximising the UK’s strengths.

    Start, stop, go

    Universities generally produce people with the skills the economy needs. They do not produce as many people with the skills the economy needs at pre-degree level, because the curriculum is usually built around undergraduate degree level qualification, but there is no other game in town when it comes to producing the graduate workers an economy requires.

    Universities will probably never provide all the sheet metal workers the country requires or fill the massive gaps in the care system but they will provide a good number of the nuclear physicists, programmers, engineers, lawyers, accountants, and managers the industrial strategy requires.

    The problem is that universities have almost no incentive to teach the things that the industrial strategy says the country needs. They may do so for academic reasons, civic good, inertia, research profile, specialism, or something else, but teaching the future home students in high-cost programmes is the exact opposite way any sensible university financial planner would arrange their portfolio of programmes. Programmes at pre-degree level have students for less time on them, with a less obvious market, and comparable individual unit costs. An even worse deal.

    To look at this another way the university which aimed solely to meet the needs of their local and national labour markets would have to ignore the financial reality they exist within. My own view is that on narrow economic terms it’s a good thing universities teach broad based curricula because the labour market is unpredictable and benefits from a range of skilled people to draw upon. The government view is that it’s not only necessary to entirely reform the skills pipeline but to provide more specific skills in AI, engineering, cyber, and other STEM related fields.

    The government has therefore created a misalignment between financial incentives and the labour market outcomes they are trying to achieve. To address this the government could increase university funding generally through strategic grants (probably not going to happen), boost other forms of income through relaxing visa regulations (absolutely not going to happen,) or improve incentives to teach home students in high cost programmes (we might get some inflationary fee increases).

    The alternative is to recognise that an entirely student demand led model is going to lead to some skills gaps. Various attempts to nudge students into certain qualifications (remember the adverts on cyber?) don’t seem to have made an awful lot of difference. Through the Post-18 project my co-authors and I argued that some HE provision could be commissioned:

    The Devolution Bill should make provision for mayoral combined authorities to convene a post-18 education and skills provision group with a diversity of provider and industry representation that can draw on the insight from regional growth insight centres to develop post-18 pathways, provision and partnerships. These groups could initially propose business cases for reprofiling of funding but over time could be given direct commissioning powers and/or direct injections of public funding to catalyse new provision aligned to national or regional economic growth priorities.

    The government can find ways of boosting or redirecting teaching resources or the country, in the long term, can have fewer graduates in high-cost degrees. There is no path to more students studying more expensive things in line with government priorities without resources to do so.

    Regions

    Regional growth is another area where the incentives make absolutely no sense. The UK is unusually imbalanced where second cities are comparably unproductive to many other large economies. One way in which to rebalance economies is to increase investment and the supply of skilled human capital.

    The single most important measure of skilled human capital in the university sector is Graduate Outcomes. Graduate Outcomes measure whether a student is in highly-skilled employment fifteen months after they graduate. Universities are regulated and placed in league tables based on this metric. The incentive for universities is to place their graduates where there are the highest number of available highly skilled jobs which is London. Even building a spin-out outside of London only gives a 6/10 chance the spin-out won’t migrate to the capital anyway.

    Universities do not have golden handcuffs to their places and the economic geography of London can too easily pull their economic goods away. Research excellence and impact is not measured on a regional footprint. Infrastructure investment does not follow where there is the greatest latent potential. There is astoundingly little policy that is place sensitive.

    In supporting the UK’s strengths universities are not often the primary beneficiaries of the economic growth they support. There is lots of stick for them to do good economic things but the carrots for supporting growth, particularly in local economies, tend to be the odd grant and bit of underspend like the Regional Innovation Fund. The government cannot be surprised about investment and talent flight where regional educational incentives are non-existent.

    Leave alone

    It can feel like the role of universities in the economy is both over- and understated. On the one hand they are not designed to, never will, and should not be expected to solve every problem with the economy.

    They will not bring back manufacturing, they will not rebalance regions on their own, and they will not fill all of the gaps in the labour market. At the same time they do a lot of good stuff as employers, innovators, anchors, coalition builders, contributing to clusters, attracting knowledge workers, and through educating students.

    The bit where the incentives do work is producing students for the knowledge economy. The part of the UK’s economy that has grown as manufacturing has declined. Universities have a reliable (if not predictable) income, their graduate outcomes are regulated (how well is a different question), and parts of the economy make good use of their graduate skills. If university marketing departments are to be believed this good employment is also one of their major selling points which through student recruitment then puts more funding back into the system. The incentives just line up a bit better.

    The problem is that universities are not only not always supported to get on with the job but they aren’t left alone to do so. It would perhaps be too much to hope for but welcome that the reshuffle leads to clear direction on what universities are expected (or maybe even regulated or incentivised to do) in the local economy, recognition for their national role and how they will continue to be supported to do so, and a clear sense of where they will be given a little boost but mostly left alone to keep doing the good things they are doing.

    Refiring the economy does not have to be about doing new things. It might be about doing old things in a more joined up, properly funded, and regionally focussed way. As growth goes to the top of the agenda, let’s not forget the work universities are already doing.

    Source link

  • The maintenance loan now covers only half of students’ costs

    The maintenance loan now covers only half of students’ costs

    I’m in two minds over whether it was a curse or a blessing – and I may be retrospectively overstating its impact.

    But when I sat down to watch a bit of telly back on Tuesday 13th May 2003, I had no real sense of the extent to which it would end up causing me lost sleep over silos.

    The Day Britain Stopped was a BBC1 docudrama, set in the near future, that explored how a devastating chain of events could leave the country completely paralysed.

    First, a national rail strike pushes huge volumes of passengers and freight onto the roads, overwhelming the motorway network.

    Then the M25 becomes jammed after multiple accidents, including one on the Dartford Crossing. Poor coordination between highways management, police, and emergency services slows response times, and conflicting rerouting decisions worsen the congestion, leaving rescue crews unable to reach incidents.

    Then severe delays ripple through the air transport system, compounded by diverted flights and congested airports. And these all lead to a mid-air collision between two aircraft near Heathrow – killing hundreds – as communication and coordination systems fail under strain.

    Gridlock

    I was thinking about The Day Britain Stopped on a campus a few weeks ago. Student leaders were explaining a proposal from their university to take 30 ECTS credits or so of most degrees (ie a semester) and turn them into a compulsory placement.

    A “mini sandwich” is not, all things considered, a terrible idea. Students would gain valuable work experience – which we know helps with graduate outcomes – and in aggregate there would end up being a moderate reduction in teaching and assessment costs.

    But on the assumption that it would often be unpaid, given the maximum maintenance loan is now significantly below the National Minimum Wage (when chunked out at 30 weeks for 35 hours a week), working full-time for a semester would pretty much prohibit students from earning the extra that many need to now.

    Just like the two teams each re-routing traffic down the same country lanes around the M25, it’s a classic case of not seeing the full picture – and when combined with the HE sector’s preference for policy over scenario planning, potentially disastrous. But nothing like that could be coming in the year ahead, surely?

    Britain’s best days are ahead

    This does nothing for my doom-mongering street cred, but back in May 2024 – when HEPI and TechnologyOne published work from Loughborough University on a Minimum Income for Students (MIS) – I allowed myself a little optimism.

    In a sea of information that seemed to be designed to entice participation rather than be realistic about the costs of it, I imagined that the headline figure – that students need £18,632 per year outside of London to achieve a baseline student experience – would start to adorn .ac.uk cost of living webpages offering budgeting advice to students.

    Given the methodology for calculating the MIS was close to that used by the Living Wage Foundation, and given the Westminster government’s intent to ask the Low Pay Commission to (to all intents and purposes) replicate that methodology for the National Living Wage, I even allowed myself to imagine for a few moments that government might commit to closing the gap between available support and liveable income. It surely wouldn’t be committed to a liveable income for work but not one for study?

    Alas, it wasn’t to be. Vanishingly few of the universities that offer “typical” or “sample” student budgets quote anything like that figure – and that’s if they offer one at all. International students are still misled into thinking that the maximum maintenance loan will cover their costs, parents are still completely in the dark about what they’ll really need to contribute, and many of the survival stories that I’m told by new student leaders every summer have gone from amusing to heartbreaking.

    The MIS report even recommended that when students apply to higher education, UCAS could compare the support available from the student’s home UK nation with their expected living costs. But at the time of writing, the admissions service’s webpage on budgeting instead offers “average” spend figures from 2020, and somehow omits the £2,110 that the source study found students spending when preparing for higher education.

    Governments, meanwhile, did little. This coming September, Scotland is offering up a freeze (real terms cut) on maintenance support, Northern Ireland has an increase that still falls significantly short, and both Wales and England are increasing the maximum by 3.1 per cent. A frozen means test threshold means even fewer will get that max in England – and right now both RPI inflation and CPI inflation are in fact running at 4.1 per cent.

    Update: It’s all worse

    As such, if last year’s report was like a warming sign, the 2025 update to the MIS report ought to be like a fire alarm. The update expands on the 2024 research by examining first-year students and those living in halls for the first time – and through focus groups across five UK cities, researchers found that first-year students face the highest costs of any student group – £418 per week including rent to reach a minimum acceptable standard of living.

    This represents a “first-year premium” of around £14-20 more per week than continuing students, driven by both “setting-up” costs (laptops, kitchen equipment, bedding) and “settling-in” costs (freshers week activities, food wastage while learning to budget, and higher social spending to establish friendships).

    The financial pressure on students has intensified dramatically across all UK nations. In England, even students receiving maximum maintenance support can only cover half (50 per cent) of their actual living costs, forcing them to work over 20 hours per week at minimum wage to make ends meet.

    That, I add in passing, is 20 hours more a week than most politicians’ alma mater allows students to work to have a fulfilling student experience:

    Studying at Oxford is an exciting experience with plenty of opportunities and a high number of contact hours. For this reason, paid term-time employment is not permitted except under exceptional circumstances and in consultation with your Tutor and the Senior Tutor.

    Students from different UK nations face different circumstances – Welsh students have 63 per cent of their costs covered by maintenance support, while those from Northern Ireland receive support covering just 42 per cent of their needs. The gap between what students need and what they receive has created what the researchers term a “hidden parental contribution” – one that now exceeds £10,000 annually for English families.

    I still regularly encounter those who expect to see mass dropouts as a result of the growing gap – but anyone that works closely with students will tell you that it’s a slow participation implosion that we’re seeing rather than a non-continuation explosion.

    Two-thirds of students now work during term time, the highest on record – pressure that is squeezing out various aspects of university life, as students report less time for independent study, fewer opportunities to join activities, and increased commuting distances. Many are experiencing a fundamentally different university experience than they expected, with a third having less disposable income than planned, and 1 in 5 buying fewer books or course materials.

    Over a three-year degree, the total cost of reaching minimum living standards ranges from approximately £59,000 in Wales to £77,000 in London, excluding tuition fees. And these figures are what students need not for luxury, but simply to participate fully in university life with dignity. Even living in accommodation that is “purpose built” for students, while providing important social opportunities, is typically more expensive than shared private housing – with rent making up to 47 per cent of total living costs in London.

    Thanks to Terry Nutkins, Gordon Banks and Let Loose

    One particularly pleasing aspect of the report is the “surprising” costs that so many miss when casting round the marcomms office for a couple of student ambassadors to cobble up a budget.

    Practical necessities include storage costs between academic years when halls contracts end, insurance for phones and laptops used outside accommodation, and mattress protectors for the “really cheap and uncomfortable” beds typically provided.

    First-year students face particular financial pressures during their settling-in period, wasting money on food while learning to shop and cook independently, plus ongoing laundry costs in halls that can reach £5 weekly for basic washing needs.

    Academic periods bring additional expenses, from extra food costs during exam sessions when students spend long hours in libraries, to transport costs for third-year students attending job interviews and graduate recruitment events.

    Basic costs related to social participation and mental health are also included. They include individual crockery and cutlery in halls to avoid hygiene issues when sharing with strangers, a £20 (!) annual personalisation budget for room decoration that prevents students feeling like they’re “in prison,” and £50 annually for clothing required for university social events and society activities.

    They are seemingly minor expenses – but they all add up, and they highlight how the “minimum” standard isn’t about luxury, but about enabling students to participate fully in university life, maintain their mental health, and avoid social exclusion.

    There’s also dehumidifier packs to combat poor ventilation and condensation from drying clothes, tabletop ironing boards to fit cramped spaces, and overdoor hooks because standard furniture is insufficient for storing belongings across shared living arrangements.

    Technical necessities include extension leads for inadequate electrical outlets and Wi-Fi boosters for poor connectivity, while protective measures like upholstery and carpet cleaners become crucial for avoiding deposit losses. Even basic items like door mats for communal cleanliness and shower caddies for bathroom storage represent additional shared costs when five people live together.

    Beyond accommodation, students face numerous individual costs related to campus life and practical necessities that all accumulate quickly. They include water bottles and Tupperware containers for daily campus use and food storage, delivery and returns costs reflecting modern shopping patterns, and small airers for bedroom clothes drying when shared facilities are limited.

    Admin costs like provisional driving licences at £34 become the most practical form of student ID, cheaper and more portable than passports. And there’s eye tests every two years with potential glasses purchases, and a small budget for everyday medicines and a couple of prescriptions annually – along with significant variations in personal care costs, the report particularly noting “the higher cost of hairdressing for afro hair in particular,” while emphasising that regular haircuts are deemed essential for being “presentable” and maintaining “self-respect”. Luxuries these are not.

    Parental contribution

    The report repeats last year’s calls for urgent, system-wide reform based on five principles: simplicity, transparency, independence, sufficiency, and fiscal neutrality. Key recommendations include increasing maintenance support so students can reach minimum living standards through a combination of government support and reasonable part-time work, providing a “first-year boost” to help new students establish themselves, and raising parental contribution thresholds so families only contribute when they themselves have achieved minimum living standards.

    The researchers argue reforms could be implemented without additional government spending – although the proposal is to reintroduce much-maligned but fairly progressive real interest rates on student loans, ensuring those who benefit most from higher education contribute accordingly. Sadly, they’re usually the loudest too.

    Without reforms, they warn of three critical risks – increasingly unequal access to higher education, declining quality of student experience, and threats to sector sustainability as students struggle to afford university attendance.

    But forgive me for the doom. Any or all of that will have to wait until at least September 2026, and even then is looking increasingly unlikely, given that the Treasury is said to be staring at a £41bn hole in its budget, and is currently borrowing the money on the bond markets to lend to students at an interest rate of 4.5 per cent – a far cry from 0.5 per cent nine years ago.

    And it could all be about to get much much worse.

    Basket cases

    Whether you use RPI or CPI is almost immaterial – it’s the basket of goods that matters, and neither basket captures the basket of a student typified in the MIS. Students spend more on food than the average consumer, and in that basket they’re less able to “trade down” through the brands.

    The Bank of England expects food inflation to be around 5 per cent Q3, rising to 5.5 per cent by the end of the year – higher global commodity prices, higher labour costs and Extended Producer Responsibility regulations that come into effect from October of this year all driving the change.

    In June, Beef and Butter were up at 20 per cent, Coffee was at 12.5 per cent and Chocolate was running at 16 per cent. Decent rent data is hard to come by – but it always seems to increase by more than inflation. If not included in their rent, energy prices have shifted from being a drag on inflation to providing a boost – Ofgem’s price cap for households is £1,720 for July-September 2025, almost 10 per cent higher than the same period last year.

    And the BoE’s key mitigation measure – to cut the Bank Rate by 0.25 percentage points to 4 per cent at its August meeting – might be helping students’ landlords, but it won’t be impacting student budgets.

    Meanwhile, if students have been steadily increasing their term-time work (both in numbers of students and hours worked), that could be a coming problem too. Employment growth has stagnated, and job vacancies have fallen significantly. And while two-thirds of students say they’ve been in work during term time, 89 per cent of applicants are now expecting to find work – rising to 93 per cent of care leavers, 94 per cent of international students and 96 per cent of estranged students.

    Either there’s lots of spare jobs going, or the UK may be about to run out of part-time work for students. That’s a problem few will see coming, will be almost certainly be worse in some cities than in others, and would be exacerbated if the usual ratio of students spending in businesses v those working in those businesses shifts significantly – both having grown gently in tandem as student numbers have grown. The need to convert more jobs on campus to those that students can do has never been greater – even if they sound like the first to have gone as teams have contracted in recent years.

    Some will find work that’s further and further away from campus, some will find work that’s more and more punishing on them both mentally and physically, and some simply won’t find it at all. Many – like the international student leader I met last week – will find themselves working for less than minimum wage just to pay their fees, in a country that couldn’t seem less interested in those sorts of labour market abuses if it tried.

    God forbid a student has a setback, an accident or a costly health problem. Or happens to be a student in a year when if nothing else, there will be major and un-modelled impacts on student housing supply as a result of dramatic reforms to the way that an already scandalously poor rental market is regulated.

    Implosions v explosions

    Maybe a crisis is coming – the classic unplanned-for crisis of the sort in The Day Britain Stopped, when various factors conspire in a single period to multiply each other into something that few saw coming. But even if it isn’t an explosion and we see non-continuation rates fall off a cliff, we can see what’s coming – students choosing to stay at home just as their local university closes courses, students choosing against the extracurriculars that would make up for the skills their course supplies but are no longer needed.

    Students breathing in the spores of black mould as they literally choose between heating, and eating.

    In the 2024 MIS report, the authors warned against any increases to maintenance support that would come at the cost of lower participation in higher education, “for example if an increase could only be paid for by capping the number of students who can study in higher education”. The kneejerk makes sense – neither governments, universities nor students are ever keen on measures that might limit opportunity.

    But offering students a loan that only covers half of their basic living costs, and then asking them to work a minimum 20 hours a week during term-time isn’t “opportunity”, it’s a scam – one that sells “student life” but for those on low incomes offers the kind of experience associated with labour market outcomes they’re less likely to achieve anyway, and one that allows lots of people to pat themselves on the participation back while plunging unsuspecting students into poverty.

    If the country really can’t afford mass participation in higher education, and students can’t afford to be students, the only morally right thing to do is admit it. And if telling students they need £21,126 per year to live on might put some of them off, then maybe it should.

    Source link