The tuition fee of £9,250 was set in 2017. Eight years of inflation later, it is worth approximately £7,000 in 2017 terms. Universities are receiving less per student, in real terms, than they were at the start of the current funding settlement.
At the same time, their costs — staff salaries, energy, building maintenance, compliance — have increased substantially. The arithmetic is simple and alarming.
The International Student Dependency
Many universities have balanced their books through international student fees — typically £22,000-£38,000 per year for taught postgraduate courses. These students are profitable. They cross-subsidise home student provision and research activity.
The problem is that this model is vulnerable. Government immigration restrictions, geopolitical tensions with China (still the largest source of international students), and competition from other English-speaking countries all threaten the income stream.
What Can Change
The government faces a constrained set of options. Raising tuition fees is politically toxic. Increasing university grant funding requires either new taxation or reallocation from elsewhere. Allowing institutional failure — the collapse of a smaller university — is politically and socially costly but may be inevitable.
The independent review of university finances commissioned by the government is expected to recommend a modest increase in fees, indexed to inflation, alongside a consolidation of research funding into fewer but better-resourced institutions.
