The administration of Prime Minister Keir Starmer in the United Kingdom will raise university tuition fees for the first time in eight years, a report by The Telegraph said on Monday.
Education Secretary Bridget Phillipson is expected to make a statement to MPs this afternoon outlining expected tuition fee increases in England.
A freeze on fees is due to expire in 2025, at which point they would rise with a measure of inflation called RPIX which does not include housing costs.
A longer term view of fees is expected to form part of the three-year spending review
The fee rise is expected to come into force from September 2025, meaning that it will affect A-level students who are currently applying to universities.
Tuition fees have remained frozen at £9,250 since 2017. It is unclear which month’s inflation figures Labour will choose to link fees to, but matching them to the current rate of 2.7 per cent would see fees rise to about £9,500 from next year.
Previous reports suggested that the Government would raise tuition fees to £10,500 over the next five years. The Telegraph understands that ministers do not want to commit to any uplift beyond the next academic year as they consider complete reform of the current system.
The move follows growing concerns that many institutions are now facing a financial crisis, with 40 per cent of English universities expecting to slump into a deficit this year.
The Coalition government tripled tuition fees to £9,000 in 2012. Fees only increased after that to hit £9,250 in 2017, where they remain frozen today despite soaring inflation over the past few years.
The Russell Group of elite universities has argued that the cap on tuition fees means they are now making a loss of about £4,000 per UK student.
University finances have also suffered from a dramatic drop in lucrative international students following a Tory crackdown on dependent visas.
Home Office figures showed 16 per cent fewer visa applications were made between July and September than in the same period in 2023.
Foreign students, who typically pay triple or even quadruple domestic students, had been largely propping up the sector. A sudden fall in numbers has removed a crucial lifeline for universities and amplified calls for immediate action from the new Government.
Warnings have been mounting throughout the year about the state of university finances – and there have been several crunch points along the way.
New rules introduced by the last Conservative government at the start of the year made it harder for international students to bring family members with them.
Then came a currency crisis in Nigeria.
Both set alarm bells going for universities. They have become increasingly reliant on the higher fees paid by international students, many of whom are Nigerian, as fees for students from the UK have not kept up with inflation.
It’s sparked serious concern that a university could go bust, and vice-chancellors called on the Labour government a few weeks ago to stabilise their finances by increasing funding and raising tuition fees.
Universities then said last week that they had been squeezed even further by an increase in national insurance contributions.
The government will be hoping that increasing tuition fees could help offset that.
Maintenance Grants Pressure
Sources close to discussions told The Telegraph they were hoping that a small tuition fee rise would be announced in the Budget last week as an acknowledgement by Rachel Reeves of the severity of the situation.
However, the Chancellor held off from unveiling any new funding for the higher education sector in her maiden Budget.
The Telegraph said it understands she would have faced significant pressure to couple an interim increase in tuition fees with a reinstatement of maintenance grants, which would be at huge expense to The Treasury.
Modelling previously studied by Labour suggested reinstating the grants at a boosted £4,009 could cost up to £2.3 billion a year, The Telegraph revealed last year.
Announcing a tuition fee rise outside of a fiscal event is expected to buy the Government time to finalise its shake-up of the university funding model.
Ms Phillipson is expected to announce the inflation-linked rise in fees as a “first step” towards root-and-branch overhaul of the current system.
It could leave the door open to a future return of maintenance grants, a form of means-tested support which was scrapped by Lord Cameron in 2016.
The Government is also understood to be considering reforming the tuition fee repayment model, over concerns that swelling student debt disproportionately impacts less-advantaged graduates.
Ministers have been meeting with senior figures in the university sector over the past few months after growing calls for immediate support.
Vivienne Stern, the chief executive of Universities UK (UUK), told The Telegraph in September that the Government must step in to “stabilise the ship”, as she called for fees to rise in line with inflation from 2025/26 as a “necessary” step.
She said: “Just get on and index-link the fee – this cannot be allowed to continue. That’s the bare minimum – you know, you can’t go on like this.”
UUK’s proposals suggest that if investment for university teaching had kept up with inflation, funding per student would now be in the region of £12,000 to £13,000.
The Department for Education is yet to respond to enquiry.
