Pressure on government to take action over the ‘cost of learning crisis’ in the UK capital

The Cost of Learning Crisis: A Growing Concern for UK Universities and Students

The higher education sector in the UK, particularly in the capital, is facing an unprecedented crisis that has far-reaching implications for students, universities, and the broader economy. This ‘cost of learning crisis’ is a multifaceted issue, driven by a combination of factors including high inflation, frozen tuition fees, and the lingering effects of the COVID-19 pandemic.

Financial Strains on Universities

UK universities are under significant financial pressure, with many institutions on the brink of financial instability. According to the Office for Students (OfS), up to 72 per cent of England’s universities could be running budget deficits by next year.

The primary cause of this financial strain is the failure of tuition fees to keep pace with inflation. Since 2017, tuition fees have been frozen at £9,250 per year, which, if adjusted for inflation, would be nearly £15,000 today. This real-terms drop in income, coupled with inflation-driven increases in operational costs, staff salaries, and pension payments, has left universities making a loss of £2,500 on each domestic student.

Impact on Students

The financial struggles of universities are mirrored by the dire financial situation of many students. The cost of living crisis has hit students particularly hard, with many living just £2 per week above the destitution line. A significant number of students, especially those from socioeconomically disadvantaged backgrounds, regularly go without food and other essentials due to financial constraints.

The Russell Group has reported that one in four students go without food, and this figure rises to over three in ten for students from the most disadvantaged backgrounds. The pressure to balance academic responsibilities with part-time or even full-time employment has become a norm for many students.

This not only affects their academic performance but also their overall well-being. Over half of the students surveyed reported that their academic performance had suffered due to poverty and the cost of being a student, with 18 per cent considering dropping out due to financial reasons.

Institutional Responses and Government Actions

In response to these challenges, many universities and their Students’ Unions have implemented various measures to support students. These include opening campus-based food banks, providing hardship funding, and offering other forms of financial assistance. However, these efforts, while commendable, are insufficient to address the scale of the problem.

The government has taken some steps, such as announcing a modest increase in tuition fees from £9,250 to £9,535 per year, starting from the 2025/26 academic year. However, this increase is expected to raise only £390 million annually, which is largely offset by changes to employers’ national insurance, leaving a net gain of just £18 million for universities.

Long-Term Implications and Potential Solutions

The long-term implications of this crisis are severe. Universities are being forced to consider staff redundancies, course closures, and mergers to stay afloat. This not only affects the academic community but also the local economies, as many universities are significant employers and contributors to their regions.

To address this crisis, the government needs to consider more comprehensive solutions. These could include linking tuition fees to inflation, increasing grants to universities, or allowing more overseas fee-paying students. Additionally, providing unconditional basic income support to students could be a game-changer in alleviating poverty among university students.

Conclusion

The ‘cost of learning crisis’ in the UK is a pressing issue that requires immediate and sustained attention from policymakers. As accountants at Cutts & Co, we understand the importance of financial stability and the need for sustainable funding models.

The future of higher education in the UK depends on finding a balance between ensuring universities remain financially viable and supporting students through these challenging times.

By acknowledging the depth of this crisis and working towards holistic solutions, we can ensure that higher education in the UK continues to thrive, benefiting both students and the broader economy.