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.
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.
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.
This audio is auto-generated. Please let us know if you have feedback.
Dive Brief:
Austin Independent School District’s board of trustees approved a plan Thursday evening to close 10 schools in the Texas district by the 2026-27 school year in the midst of ongoing enrollment declines.
The closures will impact nearly 3,800 students who will be reassigned to new schools in the district and the plan will cut 6,319 open seats, according to Austin ISD.
The move is expected to save the district $21.5 million, according to Austin ISD Superintendent Matias Segura during the Thursday board meeting. That amount more than covers the district’s budget deficit of $19.7 million this school year.
Dive Insight:
Segura said during the board meeting that developing and carrying out this school closure plan has been “a very difficult process.”
Most of the schools impacted by closures are at the elementary level, according to the district.
Segura also said he wished the district didn’t have to make this decision, “but the pressures are gargantuan.”
Austin ISD instructed 72,700 students across 113 schools in 2024-25.
When Austin ISD first announced it was considering school closures and consolidations earlier this year, Segura emphasized that the district lost over 10,000 students within the past decade, which led to a total of 21,000 empty seats.
While the district’s preliminary fall enrollment data has yet to be released by the Texas Education Agency, Austin ISD has said it’s likely that the number of students attending its schools will continue to drop.
In recent months the district considered several factors before proposing which schools should close, including size, condition, student enrollment and operational costs.
Elsewhere in Texas, Houston Independent School District laid off and reassigned hundreds of its teachers “to align” them “with student enrollment” as the district had previously projected a drop in enrollment by about 8,000 students this school year.
Houston ISD, which is under the leadership of the state, initially planned to announce a proposal this fall to close some schools during the 2026-27 school year. However, the district announced last week that Superintendent Mike Miles told principals he was no longer going to recommend any school consolidations to the board for 2026-27. There still may be a small number of consolidations needed in future years, the district said in a video update on Wednesday.
Texas’ districts student enrollment declines are part of a larger trend across states and districts nationwide, with the downward trajectory straining budgets tied to per pupil funding. Reasons for declining enrollment vary by state and district. An ongoing decline in birthrates has been a common factor while other education leaders have cited this year’s federal immigration crackdown and newer school choice policies for detracting students from attending their public schools.
Dr. Christopher Reber, President of Hudson County Community College, with staff, faculty and students from his college.HACUThe Hispanic Association of Colleges and Universities (HACU) launched its 39th Annual Conference on Saturday, bringing together more than 1,600 education leaders, advocates, and students under the theme “Championing Hispanic Higher Education Success: Forging Transformational Leaders to Uplift Democracy and Prosperity.”
The three-day gathering in Aurora, Colorado, opened with a sense of urgency as attendees acknowledged both the progress made in Hispanic higher education and the mounting challenges facing students and institutions.
“The attacks on immigrants and higher education by the Trump administration is reason for why we need organizations like HACU to stand up for students like me,” said Maria Valasquez, 21, a college junior who attended the conference for the first time. “The threats are real and these are scary times for many first-generation college students.”
The conference began with four specialized pre-conference events on October 31 and November 1, drawing approximately 200 participants total. These included the 14th Annual Deans’ Forum, focused on “Shaping Visionary Leaders for a Thriving and Democratic Future”; the Third Women’s Leadership Symposium; the 24th Annual Latino Higher Education Leadership Institute, themed “Building Transformational Leaders at All Levels to Strengthen Democracy and Prosperity”; and the 11th Annual PreK-12/Higher Education Collaboration Symposium, addressing “Bridging Education for Lifelong Success: Innovation, Collaboration, and Life Readiness.”
The main conference kicked off with an Opening Plenary convened by Dr. Juan Sanchez Muñoz, HACU’s Governing Board chair and chancellor of the University of California, Merced. HACU Interim CEO Dr. John Moder delivered the Annual Address, followed by the induction of Dr. Félix V. Matos Rodriguez, chancellor of The City University of New York, into HACU’s Hall of Champions 2025.
Dr. Mordecai Brownlee, President of The Community College of Aurora, and Dr. Christopher Reber, President of Hudson County Community College at the HACU conference.Corporate and nonprofit partners reaffirmed their commitment to Hispanic student success. Maria Pia Tamburri, Dominion Energy’s vice president of intergovernmental affairs and economic development; Audrey Stewart, Google’s global head of impact and reporting; and Francesca Martinez, the American Heart Association’s national director of the Bernard J. Tyson Office of Health, delivered remarks on behalf of their organizations. Capital One was also recognized for its support.
A regional focus emerged through the Illinois Hispanic-Serving Institution Summit, also held November 1. After welcoming remarks from Moder and virtual comments from Illinois State Representative La Shawn Ford, a panel discussion addressed the midwestern region’s legislative agenda. The panel featured Dr. Susana Rivera-Mills, president of Aurora University; Dr. Lisa Freeman, president of Northern Illinois University; and Juan Salgado, chancellor of City Colleges of Chicago.
The summit provided a platform for discussing HACU’s policy and legislative priorities in Illinois, including the critical role college and university presidents play in advancing and sustaining Hispanic-Serving Institutions across the state. Participants shared promising practices and explored collaborative approaches to strengthen institutional capacity.
Seven honorees are being recognized throughout the conference for their contributions to improving opportunities for college students, with awards presented during various events over the three days.
“As a president of a Hispanic-Serving Institution and member of HACU’s Board of Directors, I witness firsthand how these colleges and universities transform lives, strengthen families, and fortify our economy,” said Dr. Mordecai I. Brownlee, President of The Community College of Aurora. “The mission of HACU is not a moment — it’s a movement. Despite the challenges of our times, our collective commitment to equity, opportunity, and excellence is just getting started.”
In an interview, Brownlee said that Hispanic-Serving Institutions are not just essential to higher education — they are essential to America’s economic growth and democratic future.
“By investing in HSIs, our nation invests in innovation, workforce readiness, and prosperity for all,” he said. “The mission of HACU is not simply about serving Hispanic students; it’s about strengthening the very foundation of America’s competitiveness and civic vitality.”
The conference continues through November 3, as higher education leaders work to chart a path forward for Hispanic student success amid an increasingly complex political landscape.
Recent policy shifts have caused significant uncertainty in K-12 education funding, especially for technology initiatives. It’s no longer business as usual. Schools can’t rely on the same federal operating funds they’ve traditionally used to purchase technology or support innovation. This unpredictability has pushed school districts to explore creative, nontraditional ways to fund technology initiatives. To succeed, it’s important to understand how to approach these funding opportunities strategically.
How to find funding
Despite the challenges, there are still many grants available to support education initiatives and technology projects. Start with an online search using key terms related to your project–for example, “virtual reality,” “virtual field trips,” or “career and technical education.”
Explore national organizations like the Bill & Melinda Gates Foundation or Project Tomorrow and consider potential local funding sources. Local organizations such as Rotary or Kiwanis clubs can be powerful allies in helping to fund projects. The local library and city or county government may also offer grants or partnership opportunities. Schools should also reach out to locally-headquartered businesses, many of which have community outreach or corporate social responsibility goals that align with supporting local education.
Colleges and universities are another valuable resource. They may be conducting research that aligns with your school’s technology project. Building relationships with these institutions and organizations can put your school “in the right place at the right time” when new funding opportunities arise.
Strategies to win the grant
Once potential funding sources are identified, the next step is crafting a compelling proposal. Consider the following strategies to strengthen your application.
1. Focus on the “how and why,” not just the “what.” If your school is seeking funds to buy hardware, don’t simply say, “Here’s what we want to buy.” Instead, frame it as, “Here’s how this project will improve student learning and why it matters.” Funders want to see the impact their support will have on outcomes. The more clearly a proposal connects technology to learning gains, the stronger it will be.
2. Highlight the research. Use evidence to validate your project’s value. For example, if a school plans to purchase virtual reality headsets, cite studies showing that VR improves knowledge retention, engagement, and comprehension compared to traditional instruction. Demonstrating that the technology is research-backed helps funders feel confident in their investment.
3. Paint a picture. Bring the project to life. Describe what students will experience and how they’ll benefit. For example: “When students put on the headset, they aren’t just reading about ancient civilizations, they’re walking through them.” Vivid descriptions help reviewers visualize the impact and believe in your vision.
Eight questions to consider when applying for a grant
Use these guiding questions to sharpen your proposal and ensure a strong foundation for implementation and long-term success.
What is the goal? Clearly define what students will be able to do as a result of the project. Use action-orientated language: “Students will be able to…”
Is the technology effective? Support your proposal with evidence such as whitepapers, case studies, or research that can demonstrate proven impact.
How will the technology impact these specific students? Emphasize what makes your school or district unique, whether it’s serving a rural, urban, or high-poverty community and how this technology addresses those specific needs.
What is the scope of the application? Specify whether the project involves elementary school, secondary school, or a specific subject or program like a STEM lab.
How will success be measured? Too often schools reach the end of a project without a plan to track results. Plan your evaluation from the start. Track key metrics such as attendance, disciplinary data, academic performance, or engagement surveys, both before and after implementation to demonstrate results.
What are your budgetary needs? Include all associated costs, including professional development and substitute coverage for teacher training.
What happens after the grant is over? If you plan to use the technology for multiple years, apply for a multi-year grant rather than assuming future funding will appear. Sustainability is key.
How will success be celebrated and communicated to stakeholders? Share results with the community and stakeholders. Host events recognizing teachers, students, and partners. Invite local media and highlight your funding partners–they’re not just donors, but partners in student success.
Moving forward with confidence
Education funding will likely remain uncertain in the years ahead. However, by being intentional about where to look for funds, how to frame proposals, and how to measure and share impact, schools can continue to implement innovative technology initiatives that elevate teaching and learning.
Gillian Rhodes, Avantis Education
Gillian Rhodes is Chief Marketing Officer at Avantis Education, creators of ClassVR. With morethan 20 years of experience in education marketing and leadership, he is passionate about helping schools use the latest technology to engage students and improve learning outcomes.
Latest posts by eSchool Media Contributors (see all)
Today’s school IT teams juggle endless demands–secure systems, manageable devices, and tight budgets–all while supporting teachers who need tech that just works.
That’s where interactive displays come in. Modern, OS-agnostic solutions like Promethean’s ActivPanel 10 Premium simplify IT management, integrate seamlessly with existing systems, and cut down on maintenance headaches. For schools, that means fewer compatibility issues, stronger security, and happier teachers.
But these tools do more than make IT’s job easier–they transform teaching and learning. Touch-enabled collaboration, instant feedback, and multimedia integration turn passive lessons into dynamic, inclusive experiences that keep students engaged and help teachers do their best work.
Built to last, interactive displays also support long-term sustainability goals and digital fluency–skills that carry from classroom to career.
Download the full report and see how interactive solutions can help your district simplify IT, elevate instruction, and create future-ready classrooms.
Laura Ascione is the Editorial Director at eSchool Media. She is a graduate of the University of Maryland’s prestigious Philip Merrill College of Journalism.
Artificial intelligence (AI) platforms, especially chatbots like ChatGPT and Gemini, are influencing many areas of higher education. Students and instructors can interact with these tools to get real-time, personalized help with nearly any academic task at hand, including helping students study or revamping course content for instructors. There is no question that the educational potential is significant, but so too are the concerns about academic integrity and the consequences of students relying too heavily on these tools. While it’s important to weigh the pros and cons of chatbots, using the right strategies and technologies can help avoid those issues and still allow faculty and students to benefit from this burgeoning technology.
Use Cases for Chatbots in Higher Education Teaching
First, let’s consider uses among faculty. They can use chatbots to help improve most areas of teaching and learning while still saving time.
Chatbots can assist with different phases of course design, including writing learning objectives and developing and repurposing content. Chatbots can also be used in evaluating student performance data if your institution offers a secure chatbot (just be sure to anonymize the data). Instructors can also use chatbots to review the rules and instructions for their assignments and tests to identify vague or subjective text and suggest clearer, more objective wording.
But one of the most impactful uses is adapting course content into formats that support students with different learning needs. Chatbots can adapt, simplify and organize text for students with learning or cognitive disabilities, generate alternative text for multimedia content, and they can even adjust their responses based on student emotions (for example, offering words of encouragement when a student is frustrated or discouraged).
Instructors may be tempted to use chatbots to grade written coursework as well, but for now, it is important to note that the technology still struggles with the nuances of grading and feedback. However, chatbots can still help by pulling out the main ideas and revealing whether a student’s essay meets basic criteria, which gives instructors a clearer starting point before reading.
You’ll see a lot of jargon and articles that make prompt writing seem complicated, but you don’t need to be an expert to write effective prompts. It’s a skill you can pick up quickly after a few tries, especially once you find what works for you and start creating your own templates to use in your courses.
Students and Chatbots: Finding a Balance
There are many ways that students can use chatbots to support learning while steering clear of misusing them for tests and assignments. Ensuring ethical and beneficial adoption of AI requires clear strategies and guidelines along with the right technology.
Improving Academic Performance
Recent research indicates that chatbots can improve learning and academic outcomes, but balance is key. When students rely on them too heavily, any benefits, like increased engagement, motivation and reflection are reduced or eliminated. When used appropriately, AI chatbots can tutor students to help them better understand and comprehend the information, which also increases engagement. Chatbots give students instant, personalized help with tasks such as summarizing content and checking grammar, and they also create a nonjudgmental space where students feel more comfortable asking questions.
Cognitive Load Reduction and Stress Management
Chatbots are ideal for offloading tasks such as summarizing a lecture transcript or highlighting key points in an assignment. With students under pressure to complete assignments, leaning on AI can also reduce stress and anxiety by giving them more time to focus on the important elements of an assignment.
Similarly, chatbots can help students visualize information by generating charts, graphs or images to support their ideas. They can also provide adaptive support for students with disabilities or language barriers by reading, translating, simplifying or reformatting content to meet their needs. This reduces cognitive load, allows students to focus on the assignment itself and builds confidence in their ability to complete the work.
Strategies for Reducing Chatbot Misuse
Because of the speed and ease of use for chatbots, students may begin to use them as a shortcut to get work done instead of a supplemental learning tool. That’s a big issue. It bypasses critical thinking, contextual understanding and collaboration. This not only cheats the student out of learning but creates academic integrity issues for higher education institutions to address and stay ahead of.
Cheating is common in higher education, and with recent surveys indicating that more than 85% of students use AI daily to help with schoolwork, there’s a good chance of overlap. Students have mixed opinions when it comes to using AI for homework, with around 40% of students acknowledging that using AI for research and writing assistance should be acceptable, but there should also be limitations and ethical use.
Communicating with students about academic integrity codes of conduct, AI use, and cheating policies and ramifications are the first steps in setting expectations. But delivering assignments in ways that reduce opportunities for the use of chatbots or that lay out specific guardrails for chatbot use can also be helpful.
Reducing Chatbot Cheating
Cheating in higher education will never completely go away, and efforts to maintain and manage tools and channels used for cheating must be ongoing. As more students leverage chatbots for both approved and unapproved use, educational institutions can work to help students understand the appropriate way to leverage technology within the learning environment.
While educators struggle to detect AI use reliably, AI detection tools can identify unedited chatbot-generated content with reasonable accuracy. But their effectiveness drops when students edit or modify responses or use AI paraphrasing tools to rewrite the content. They’re more useful as a gut check, not definitive proof that the text was AI-generated.
Remote proctoring during assessments and written assignments adds another barrier to cheating. Ideally, the proctoring solution should leverage AI test monitoring together with live human proctors, which gives faculty the control to prevent AI use and the flexibility to allow approved resources. For example, instructors can proctor exams or essays by restricting access to all unauthorized websites and software, including chatbots, while still providing access to specific materials like case studies or tools like Word, Excel and Google Docs.
Another option is to use scaffolded, realistic assignments and assessments that focus on real-world application and requiring students to connect course content to their personal experiences or context. This makes it more difficult for chatbots to generate accurate or meaningful responses. For example, assessments could ask students to develop a scenario based on a local community issue, work on collaborative projects that include peer reviews or create video responses that reference specific class lectures or materials. This approach helps evaluate students’ true understanding of materials and that they are developing practical skills.
Set the Stage Now for an AI-Inclusive Future
AI chatbots are powerful tools that can make education more personalized, accessible and engaging. However, their misuse can undermine academic integrity and dilute learning. The solution, in most cases, isn’t to ban them outright, but to integrate them responsibly throughout teaching and learning processes. Striking this balance isn’t always easy, but it’s necessary to preserve the value of learning while preparing students for a future where AI will almost certainly be a part of their work.
Tyler Stike is the Director of Content at Honorlock and a doctoral student in educational technology at the University of Florida. In his role at Honorlock, he develops a wide range of content on online education, assessment, and accessibility. He is interested in how affective states influence learning and performance, and plans to research how AI can support adaptive learning experiences that help students manage those states.
References
W. Dai et al., “Can Large Language Models Provide Feedback to Students? A Case Study on ChatGPT,” 2023 IEEE International Conference on Advanced Learning Technologies (ICALT), Orem, UT, USA, 2023, pp. 323-325, doi: 10.1109/ICALT58122.2023.00100.
Sánchez-Vera, Fulgencio. 2025. “Subject-Specialized Chatbot in Higher Education as a Tutor for Autonomous Exam Preparation: Analysis of the Impact on Academic Performance and Students’ Perception of Its Usefulness” Education Sciences 15, no. 1: 26. https://doi.org/10.3390/educsci15010026
Kofinas, A. K., Tsay, C.-H., & Pike, D. (2025). The impact of generative AI on academic integrity of authentic assessments within a higher education context. British Journal of Educational Technology, 00, 1–28. https://doi.org/10.1111/bjet
While there is wide agreement that student engagement plays a vital role in learning, educators continue to face uncertainty about what engagement looks like, how best to measure it, and how to sustain it, according to a new study from Discovery Education.
“Discovery Education conducted the EducationInsights report to gain a deeper understanding of how engagement is defined, observed, and nurtured in K-12 classrooms nationwide, and we are thankful to the participants who shared their perspectives and insights with us,” said Brian Shaw, Discovery Education’s Chief Executive Officer. “One of the most important findings of this report is that engagement is seen as essential to learning, but is inconsistently defined, observed, and supported in K-12 classrooms. I believe this highlights the need for a more standardized approach to measuring student engagement and connecting it to academic achievement. Discovery Education has embarked on an effort to address those challenges, and we look forward to sharing more as our work progresses.”
Key findings of the Education Insights 2025–2026: Fueling Learning Through Engagementreport include:
Engagement is broadly recognized as a key driver of learning and success. Ninety-three percent of educators surveyed agreed that student engagement is a critical metric for understanding overall achievement, and 99 percent of superintendents polled believe student engagement is one of the top predictors of success at school. Finally, 92 percent of students said that engaging lessons make school more enjoyable.
But educators disagree on the top indicators of engagement. Seventy-two percent of teachers rated asking thoughtful questions as the strongest indicator of student engagement. However, 54 percent of superintendents identified performing well on assessments as a top engagement indicator. This is nearly twice as high as teachers, who rank assessments among the lowest indicators of engagement.
School leaders and teachers disagree on if their schools have systems for measuring engagement. While 99 percent of superintendents and 88 percent of principals said their district has an intentional approach for measuring engagement, only 60 percent of teachers agreed. Further, nearly one-third of teachers said that a lack of clear, shared definitions of student engagement is a top challenge to measuring engagement effectively.
Educators and students differ on their perceptions of engagement levels. While 63 percent of students agreed with the statement “Students are highly engaged in school,” only 45 percent of teachers and 51 percent of principals surveyed agreed with the same statement.
Students rate their own engagement much higher than their peers. Seventy percent of elementary students perceived themselves as engaged, but only 42 percent perceived their peers as engaged. Fifty-nine percent of middle school students perceived themselves engaged in learning, but only 36 percent perceived their peers as engaged. Finally, 61 percent of high school students perceived themselves as engaged, but only 39 percent described their peers as engaged.
Proximity to learning changes impressions of AI. Two-thirds of students believe AI could help them learn faster, yet fewer than half of teachers report using AI themselves to complete tasks. Only 57 percent of teachers agreed with the statement “I frequently learn about positive ways students are using AI,” while 87 percent of principals and 98 percent of superintendents agree. Likewise, only 53 percent of teachers agreed with the statement “I am excited about the potential for AI to support teaching and learning,” while 83 percent of principals and 94 percent of superintendents agreed.
Yesterday, HEPI and Cambridge University Press and Assessment jointly hosted the UK launch of the OECD’s Education at a Glance. You can see the OECD’s slides here.
Here we publish a response to the OECD from Professor Sir Chris Husbands, who is a former Vice-Chancellor of Sheffield Hallam University and also former Chair of the Teaching Excellence Framework (TEF) Panel. Chris is a Trustee of HEPI and spoke at the launch.
There is one line in the 2025 OECD Education at a Glance report which should be in bright flashing lights for this and all governments. The supporting data is on page 112 of the main report. It is this: Individuals with greater educational attainment generally face a lower risk of unemployment and earn higher wages. Race, gender, deprivation, place, subjects studied all impact outcomes in different ways, but the overall conclusion is clear, and in his HEPI briefing on the report, the OECD’s chief analyst Andreas Schleicher got the summary down to just two words: education pays.
The 2025 OECD Education at a Glance report comes in at 541 pages, and the annual appearance of the report has made it the definitive guide to education system performance and policy dynamics all around the world: in the now familiar graphs of compelling clarity, and crisp text judgements, the OECD team have made themselves indispensable to institutional leaders, policy analysts and decision makers.
This year’s report has a specific focus on tertiary education, which in OECD terms includes, but stretches a bit further than, higher education. There are some familiar and unsurprising themes in the 2025 report, but they are nonetheless important for being set out so clearly. A few key findings stood out for me, all of them speaking clearly to the English and UK policy agendas.
First, advantages are inherited: those who have at least one tertiary-educated parent are more than twice as likely to attain a tertiary qualification than those whose parents have below upper secondary attainment, though the gap is smaller in the UK than elsewhere (p.56).
Secondly, life is getting tougher for those without qualifications: the employment rate for young adults without upper secondary qualifications fell by 6 points since 2019, and by 9 points for men (pp.82-3).
Thirdly, at the same it’s getting better for the better qualified: the nearly one-in-six with a Master’s degree have higher employment rates and earnings than those with an undergraduate degree (p48).
Fourthly, education is losing the battle for public funding as the costs of health, pensions and defence rise: between 2015 and 2022, government spending on education declined from nearly 11% of budgets to just over 10% (p.278).
And fifthly, despite that decline, R&D is strengthening to drive growth and competitiveness. Where it is highest, government drives it: in the UK, Israel and Switzerland, government R&D expenditure is more than twice private expenditure (p.329).
There is more fine-grained analysis about English higher education. England, on the OECD data, is an outlier in important respects.
First: English HE is well-funded by comparison with the OECD, whatever it feels like in the sector just now. The finding is important: total tertiary expenditure per student, including R&D, is $35,000, among the highest in the OECD and 65% above the average (p.327).
Secondly, however, in the UK government tertiary expenditure is $8,000, 48% below the OECD average (p.331). This is a result of high tuition fees: undergraduate fees are three times the OECD average.
The third way in which England is an outlier is that access to higher education and completion rates within it are high – fourteen percentage points above the OECD average (p.246): access to higher education is far more a consequence of maintenance support than fee levels, but high fee levels almost certainly disincentivise non-completion. Finally, while there is a gap between economic returns to science and technology disciplines on the one hand and arts and humanities on the other in all OECD countries, the gap is much higher in the UK than in almost all other countries (p.111).
Putting all this together poses some knotty challenges. England has a successful, relatively accessible higher education system, but one which is very expensive when budgets for education are getting tighter. And this is happening when the economic returns to high levels of qualification are strengthening: masters and doctoral graduates enjoy higher returns than those with undergraduate degrees, while the least qualified face more intense difficulties. These challenges go beyond the voluminous data in Education at a Glance.
First, and painful for English higher education, the challenge is not simply the level of current funding, but funding in relation to what is a high-cost operating and delivery model. That model secures strong results in terms of access for disadvantaged students and high completion rates, but it is relatively inflexible. It’s unclear whether a lower-cost and potentially more flexible operating model would put some of the successes of the English system at risk.
Secondly, it is the economic, social and increasingly political costs of the plight of the lowest attaining young people, and especially young males without qualifications, which is attracting political attention. If money is tight, it’s more likely to go towards that problem, and the London government’s decision to move skills funding into the Department of Work and Pensions appears to be a signal of intent.
These are the leadership challenges which emerge from this year’s report: how to reshape our successful HE system so that its strengths remain, but it can be more responsive and flexible. It needs to adapt to a changing labour market and to a society in which division and inequality are being reinforced with greater ferocity.
Welcome back to our fourth season. Time Flies. We’ve gone back to an audio only format ’cause apparently y’all are audio and bibliophiles and not videophiles, so we decided to chuck the extra editing burden. Other than that, though, it’s the same show. Bring you stories on higher education from all around the world. So, let’s get to it.
Today’s guest is Pedro Teixeira. He’s a higher education scholar from the University of Porto in Portugal, focusing to a large extent on the economics of education, but he also just finished a term as that country’s Secretary of State for higher education. That’s a position closer to a junior minister rather than a deputy minister, but it has elements of both.
I first met Pedro about 20 years ago, and I ran into him again this summer in Boston at the Center for International Higher Education’s biannual shindig, where he was giving the Philip Altbach lecture. And let me tell you, this was the best lecture I have listened to in a long time.
Two reasons for this. First, Pedro spoke about his experiences as a Secretary of State trying to negotiate a new funding formula with universities in that country. I won’t spoil the details, but one big highlight for me was that he was in the rare position of being a politician, trying to convince universities not to have a performance-based element in their funding formula. And second, he talked about the future of higher education in the face of possible falling returns to education due to wider adoption of artificial intelligence.
It was such a good talk, I knew my World of Higher Education podcast listeners would think it was great too. And while I couldn’t record it, I did do the next best thing. I invited Pedro to be our lead off guest for this season’s podcast. Let’s listen to what he has to say.
The World of Higher Education Podcast Episode 4.1 | From Funding Formulas to AI: Pedro Teixeira on Higher Education’s Next Challenges
Transcript
Alex Usher: Okay, so Pedro, you were an academic at CIPES (Centre of Research on Higher Education Policy) at the University of Porto, and you went from that to being a minister of state. That’s not an unfamiliar path in Portuguese higher education—Alberto Amal, I think, did something similar. But that move from academia to government, how big a shift was that? What did you learn, and what were you not expecting when becoming a minister of state?
Pedro Teixeira: I think you’re right in the sense that there are quite a few people who have done this, not only in Portugal but also in other parts of Europe, in different areas. And I think it’s always a bit of a challenge, because there’s this expectation that, since you’re an academic—and especially if you’re an expert on the topic—people expect you to have a solution for all the problems. And it’s not exactly like that.
At the same time, I think one is worried that what you do in office will be coherent with what you had advocated as an academic and with what you had written about specific topics. That’s challenging.
In some respects, I wasn’t very surprised by what I faced, because I had been involved in advisory roles and I knew people who had been in that kind of policy role. So I think I wasn’t—I mean, there were the things you expect, like the amount of work and the long days. But I never felt that was really the most difficult part. Of course, going through these things and living them is a little different than knowing them in the abstract.
But I think the main concern for me was the permanent pressures. You are always concerned with something, always worried either about the problems you have to deal with or the problems that will emerge.
What I was not so happy with was the lack of a sense of urgency in some of the actors, both on the government side and on the side of stakeholders in the sector. Because if you feel the problems are significant, you need to move forward—of course not rushing, but you do need to move forward.
On the positive side, I think the quality and dedication of staff was very important. Civil service is often criticized, but I found that very important. And the other thing that was also very important was the role of data and evidence, while at the same time you also need to develop arguments and persuade people about the points you’re trying to make.
Alex Usher: So what were those urgent issues? I know one of the big things you dealt with was a funding formula—and we’ll come to that later—but what, to your mind, were the other big urgent issues in Portuguese higher education at that time?
Pedro Teixeira: As we know, most people in their higher education system always think their system is very specific, very different from everyone else. But in fact, we know there are a lot of commonalities across education sectors.
In many ways, the challenges were the same ones that people describe as belonging to mass systems, or what others might call mature systems. One significant issue, of course, was the adverse demographic trends.
Another was the tension between, on the one hand, wanting to broaden access and enhance equity in the system, and on the other, facing enormous pressures toward stratification and elitism, with the system tending to reproduce socioeconomic inequalities.
There were also issues related to diversity versus isomorphism. On the one hand, people agree that in order for a mass system to function, it needs to be diverse. But there are pressures in the system that tend to push institutions toward mimicking or emulating the more prestigious ones.
The balance between missions is another challenge. This relates to that issue of isomorphism, because research has become so dominant in defining what higher education institutions do and how they see their mission.
And, of course, there were issues of cost and relevance: who should pay for higher education, and how can we persuade society to put more resources into a sector that, because it is a mass system, is already absorbing a significant amount of public funding?
Alex Usher: All right. On that point about demographics, I saw a story in one of the Portuguese newspapers this week saying that applications were down 15% this year. Is that a rapidly evolving situation? That seems like a lot.
Pedro Teixeira: No. There’s been a downward trend over the last three or four years, but because the number of applicants was bigger than the number of places, it didn’t disturb things much. Most of what we’re seeing now is actually due to the fact that in 2020, with the pandemic, exams for the conclusion of secondary education were suspended.
They were only reintroduced this year. That decision was taken at the end—actually by the government I was part of—at the beginning of 2023. But in order to give students and schools time to adjust, the change only applied to the students who were starting secondary education then. Those are the students who applied this year for higher education.
Basically, when you look at the data—we don’t yet have the numbers on how many graduated from secondary education—but the number of applicants is very much in line with what we had in 2019, which was the last year we had exams for the conclusion of secondary education.
And in fact, if you take into account the declining trend of the last three or four years, I would say it’s not a bad result. It actually means the system managed to compensate for those losses.
Alex Usher: Managed to absorb.
Pedro Teixeira: Yeah, yeah. But it’s also a signal for the sector in that respect.
Alex Usher: So let’s go back to the funding formula issue, because I know that was a big part of your tenure as Secretary of State for Higher Education. What was wrong with the old formula, and what did you hope to achieve with a new one?
Pedro Teixeira: There are two things. I think there were some issues with the old formula. It was designed in 2006, so 15 years had passed. The sector was very different by then—the situation, the challenges, everything had changed.
Also, like many formulas of that time, it was quite complicated, with many indicators and many categories for fields of study. That didn’t make the system very transparent. If you introduce too many indicators and variables, in many ways the message you want to convey is lost. A funding formula is supposed to be an instrument to steer the system.
But the larger problem was that this old formula hadn’t been applied for the last 12 years. When the Great Recession started around 2005–2010, the government suspended its application. Since then, the budgets of all institutions have evolved in the same way—same amount, same direction—regardless of their number of students or their performance.
So when we came into government in 2022, the situation was, in many cases, very unbalanced. Some institutions that had grown significantly didn’t have funding to match that growth. Others that had declined hadn’t seen any adjustments either.
The idea of having a new formula was preceded by an OECD review commissioned by the previous government, which we took over. Our idea was to design a simpler and more transparent formula that would form part of the funding system. In addition to the formula, we introduced funding contracts, focused mainly on institutions located in more peripheral regions of the country.
The idea was also to have a four-year period of gradual implementation of the new model and funding system. At the same time, this would correct some of the imbalances caused by not having applied any formula for 12 years.
Alex Usher: And how did institutions respond to those proposals? Were they on your side? Were there things they liked, and things they didn’t like? Universities don’t like change, after all.
Pedro Teixeira: On the other hand, I think a significant part of the sector was very keen to finally have some kind of formula—some set of rules that would be applied to the whole sector. Of course, some institutions were afraid that by reintroducing a formula, given their recent evolution, they might end up on the losing side.
But one of the key aspects of the process was that this was always seen as a formula, or a new system, that would be introduced within a pattern of growth in funding for the sector—not as a way of redistributing funds from some institutions to others. That made the process easier. It would have been much more difficult if we had been taking money from some institutions to give to others.
This required political commitment from the government, and it was very important to have the backing of the Prime Minister and the Minister of Finance. That meant we could correct imbalances without creating disruption for institutions.
I would say the main critical points were, first, the differentiation between sectors. We have a diverse education system with universities and vocational institutions. Then there was the question of whether to differentiate between regions. Our decision was to have a formula that applied in the same way to all regions, and then use funding contracts as additional resources targeted for strategic purposes—mainly for institutions located in more deprived or less populated regions.
Another point raised in discussions was fields of study. Everyone wants their own fields—or the ones in which they are strongest—to be better funded. But we really wanted to simplify the mechanism, and I think that helped.
Finally, there was the issue of performance indicators. We didn’t propose to introduce them from the start. Because we had gone so many years without a formula, we didn’t have consistent data, and moreover we wanted performance indicators to be developed collaboratively with institutions. The idea was that institutions themselves would decide which areas they wanted to focus on, which areas they wanted to contribute to, and therefore which indicators they wanted to be assessed by.
Because we decided that performance indicators would come in a second step, some institutions wanted them introduced earlier. That was also a point of discussion.
Alex Usher: I find that fascinating, because I don’t think I’ve ever heard of universities—maybe “demanding” is the wrong word—but being disappointed that there wasn’t enough performance-based funding in a system. Why do you think that was?
Pedro Teixeira: I’m not sure I was surprised, but it was significant that some institutions were pressing for it. In some ways, it could have been a strategic approach by certain institutions because they thought they would be on the winning side.
But I think it also has to do with the fact that this competitive, performance ethos has so deeply permeated higher education. At some point, I even said to some institutions: be careful what you wish for. Because in some cases, this could curtail your autonomy and increase the possibility of government interference in your ability to devise your own strategy.
Actually, I think that was, in many ways, the only real public criticism that came up. And that was quite interesting, to say the least.
Alex Usher: I want to shift the ground a little bit from Portugal to Boston. Two months ago, you gave the Philip B. Altbach Lecture at Boston College’s Center for International Higher Education. You devoted a lot of your talk to artificial intelligence and how it’s likely to change higher education. Could you tell us a little bit about your views on this?
Pedro Teixeira: That’s a fascinating topic. Of course, it’s an important issue for many people around the world and for many education institutions.
It’s fascinating because, to a certain extent, we’ve been nurtured by a view that has dominated over the last decades—that progress has been skill-biased. In previous waves of technological progress, the labor market tended to favor those with higher skills. Education was often seen as contributing to that, helping people be on the winning side, and the returns to more education and more skills seemed to confirm it.
My concern is that this wave may be slightly different. I’m not saying it will destroy a lot of jobs, but I am concerned that it may affect skilled and experienced workers in ways that previous waves did not.
We’ve already seen, and many of us have already experienced in our own jobs, that AI is performing certain tasks we no longer have to do. It’s also changing the way we perform other tasks, because it works as a collaborative tool.
So I think there is a serious possibility that AI—especially generative AI—will change the tasks associated with many jobs that today require a higher education degree. We need to pay attention to that and respond to it.
I worry that because education has been such a success story over the last half-century in many countries, there is a degree of complacency. People take a relaxed attitude, saying: “We’ve seen previous changes, and we didn’t experience so many problems, so we’ll be fine this time as well.”
I think there are quite a few aspects we need to change in our approach.
Alex Usher: And what might those areas be? Because I have to say, whenever I hear people discussing AI and radical change in the labor market, I think: that’s the stuff that’s actually hardest for higher education to deal with—or for any kind of education to deal with.
Education is often about teaching a corpus of knowledge, and there is no corpus of knowledge about AI. We’re all flailing blindly here—it’s totally new.
I think a lot about James Bessen and his book Learning by Doing. He was talking about how education worked during the Industrial Revolution in Manchester, and in other parts of England that were industrializing. Basically, when there’s a totally new technology, who are you going to get to teach new people? There’s no settled corpus of knowledge about it.
What do you think higher education institutions should be doing in that context?
Pedro Teixeira: One of the major concerns I have is that we tend to focus so much on the impact of digitalization and technology on science and technology fields. But we should be much more attentive to how it’s changing non-technical fields—health professions, the humanities, and the social sciences. These make up a very large part of higher education, and a very large part of the qualified workforce in many of our countries.
I think there are several things we need to do. The first is to rethink the balance between the different missions of higher education. At the moment, so much of the pressure and so many of the rewards are focused on missions other than education, teaching, and learning. We need to rebalance that. If institutions don’t commit themselves to education, it will be much more difficult for anything significant to happen at the basic level—among professors, programs, and so on.
If AI does affect more experienced workers, that means many people will need more support in terms of lifelong learning. They will need support in reskilling, and in some cases, in changing their professional trajectories. This is an area where many higher education institutions preach much more than they practice.
So I think we need to rethink how we allocate our efforts in education portfolios, moving more attention toward lifelong learning. So far, the focus has been overwhelmingly on initial training, which has been the core of the sector in many systems.
Finally, we would need to rethink—or at least introduce—changes at the level of initial training: the way we teach, the way we assess students, the way we train and retrain academic staff. None of this will be obvious. But in the end, it will all come down to how much institutions are committed to education as the prime mission of higher education.
Alex Usher: So even if AI is not a mass job killer—either now or in the future—we are seeing declining rates of return on higher education around the world. There’s massive graduate unemployment in China, quite a bit in India, and in the United States, for the first time, young graduates are less likely to be employed than non-graduates of the same age.
What does it mean for the higher education sector globally if rates of return decline? Are we heading for a smaller global higher education sector?
Pedro Teixeira: I tend to be cautious with some of these conclusions. We may be extracting too much from what could be transitional situations. We’ve seen in the past moments where there were problems adjusting supply and demand for graduates, and those didn’t necessarily lead to a permanent or structural situation where education became less relevant.
In countries like China and India, higher education systems have expanded tremendously in recent years. In some ways, what we’re seeing now is similar to what other countries experienced when they went through massive expansions and the economy couldn’t absorb the rising number of graduates as quickly as the education system was producing them.
It’s also not surprising that in many countries we’re seeing lower relevance of initial training—bachelor’s or first-cycle degrees. That’s a supply-and-demand issue. As systems move from elite to mass, that’s normal. But in many cases, we’ve seen a growing premium for postgraduate degrees and for continuing education. So I’d be cautious about concluding that education will become less and less relevant.
That said, I would repeat my concern about complacency. I don’t necessarily expect a decline in the sector, but perhaps a slower pattern of growth. That will be a challenge, because we’re coming out of decades of relentless growth in many education systems.
I also think we’ll see a broader scope in how we approach education and differences in higher education portfolios. It’s not that there aren’t many things we can do, but it will probably require us to rethink what we expect from professors and where institutions should focus their attention.
Alex Usher: Right. Pedro, thank you so much for being with us today.
Pedro Teixeira: My pleasure.
Alex Usher: And it just remains for me to thank our excellent producers, Sam Pufek and Tiffany MacLennan, and you, our listeners and readers, for joining us. If you have any questions or comments about today’s episode, or suggestions for future episodes, don’t hesitate to get in touch with us at [email protected].
Join us next week when our guest will be the University of Melbourne’s Andrew Norton. He’ll be talking about what lies ahead for Australian higher education under a second Labor government. Bye for now.
*This podcast transcript was generated using an AI transcription service with limited editing. Please forgive any errors made through this service.Please note, the views and opinions expressed in each episode are those of the individual contributors, and do not necessarily reflect those of the podcast host and team, or our sponsors.
