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24th June 2024

The Financial Pressures on UK Universities and Their Impacts

Many universities are struggling to keep up with rising costs and inflation.

The funding crisis is a complex issue. It disproportionately affects already vulnerable institutions and students.

The university funding crisis is like a storm brewing on the horizon—everyone’s aware of it, but bracing for the impact is all we can do.

With national student fees capped at £9250 since 2012, many universities are struggling to keep up with rising costs and inflation. Furthermore, this year will be the first year that students have had their repayments on loans extended to 40 years rather than 30 years. These new repayment terms may mean lower-earning graduates (teaching and nursing) will end up repaying more than higher earners (bankers or lawyer) because they will repay for longer with these loans attracting interest.

So, who’s taking the biggest hits?

  1. Post-1992 Universities (New Universities)

These are the universities that were granted university status after the Further and Higher Education Act of 1992. They often don’t have long-standing reputations of older or Russell Group Universities. Their student bodies are diverse and often include a higher proportion of students from disadvantaged backgrounds. When budgets tighten, these universities are often the first to feel the pinch.

  1. Regional Universities

Universities in regions with less economic activity can struggle more than those in busy city centres. They rely heavily on tuition fees and government funding. When student numbers drop or funding is cut, these universities face tough choices such as cutting programmes, reducing staff, or seeking alternative sources of revenue.

Northern universities, in particular, face additional challenges due to historical underfunding and lower economic activity compared to their southern counterparts.

  1. Specialist Institutions

Universities that focus on niche areas, such as arts or technology, often don’t have the broad appeal or financial safety nets that larger, more diversified universities do. They provide critical education and skills but can be vulnerable when budgets are tight.

The Students Bearing the Burden

Now, let’s talk about the students who are caught in the middle of this financial storm – Unfortunately, it’s often those who are already at a disadvantage. The BBC recently published an article discussing who will be most affected by this funding crisis.

If a university goes bust, which students lose most? – BBC News

  • Low-Income Students

For low-income students, the cap on tuition fees might seem like a relief, but it’s a double-edged sword. With universities having less money, there are fewer scholarships available. These students may have to work more hours or take on additional loans, which can affect their academic performance and overall university experience.

  • Part-Time and Mature Students

These students often juggle education with work or family responsibilities. Funding cuts can lead to fewer part-time course options and less flexible learning opportunities, making it harder for them to balance their commitments.

  • Regional Disparities

Students from Northern regions may have fewer local opportunities for part-time work or access to financial support, exacerbating the impact of funding cuts on their ability to afford higher education.

The BBC article highlights that

“The participation rate in the north-east of England is 30% compared with 50% in London. Across England around 60% of the most advantaged study for a degree, compared with closer to 15% of the least advantaged.”

With more financial pressures this gap may widen further.

The Ripple Effect

The funding crisis doesn’t just impact the universities and students directly involved. It has a broader effect on the whole education ecosystem and local communities.

  1. Quality of Education

When universities have to tighten their belts, it can lead to larger class sizes, fewer course offerings, and less support for students. This can affect the quality of education and the overall student experience. It’s like trying to bake a cake with half the ingredients.

  1. Staff and Faculty

Academic and non-academic staff also feel the strain. Budget cuts can lead to job losses, reduced hours, and increased workloads for those who remain. This can impact morale and the ability to provide quality education and support services. It’s like trying to keep a car running smoothly with a dwindling supply of fuel.

  1. Community Impact

Universities aren’t just places for learning; they also provide many jobs and boost the local economy. If a university is struggling financially, it can hurt nearby businesses that depend on students spending money. This can make the whole area less economically strong. Plus, universities often help bring people together and support local events and partnerships with local businesses.


The International Student Strategy

In the face of this, many UK universities are turning to a tried and tested strategy: attracting more international students. Why? Because international students typically pay higher tuition fees than their UK students. This has become a lifeline for universities trying to balance their budgets while still providing quality education.

International students are a lucrative source of revenue, paying significantly higher tuition fees than home students. While UK students have their fees capped at £9,250 per year, international fees can range from £10,000 to over £38,000 per year, depending on the course and university. This additional revenue can help universities bridge the funding gap caused by capped UK domestic fees.

The funding crisis in UK universities is a complex issue. It disproportionately affects already vulnerable institutions and students, with far-reaching consequences beyond the classroom, impacting entire communities and the future workforce. Creative solutions are needed, alongside increased support from policymakers. As elections approach, promises on university funding remain limited. Initiatives such as eliminating interest rates on student loans, reinstating maintenance grants, or introducing an employer levy could potentially ease financial pressures on universities and students alike. These decisions will shape the future of higher education and the well-being of our communities. Let’s remain hopeful for brighter days ahead!

If you’re looking to develop insight led portfolio planning and student recruitment growth strategies then contact marketing@hunterlodge.co.uk for more.

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