The tuition fee increase is an unwarranted attack on students and graduates

By Ansh Bhatnagr

The new Labour Education Secretary, Bridget Phillipson, announced last week that tuition fees will be increasing in line with inflation, starting in September 2025. While there is a crisis of funding in higher education, the 3.1% tuition fee increase will do nothing to meaningfully address this and is instead an attack on students and graduates.

Firstly, it is important to note that this is largely a symbolic move by the Labour Government as a part of their message that they are allegedly happy to make ‘tough decisions for the national interest.’ The increase will make barely a dent in university finances, even considering the future planned increase in fees of 13.5% by 2029. This is precisely why Phillipson also called for universities to improve their budgets through ‘efficiency savings;’ which some may argue is code for firing teaching staff and spending less on the student experience.

The increase will mostly be paid for by the Government through student loans, with students expected to pay the Government back through loan repayments. These repayments are limited to 9% of the portion of annual earnings above £25k, lasting for a period of 40 years, meaning that current students will be paying an effective marginal tax rate of 29% if they expect to earn between £25k and £50k, and 49% for those earning over. For those also undertaking a postgraduate degree, the Postgraduate Loan repayments are an extra 6%, meaning most of these graduates will be paying a marginal tax rate of either 35% or 55%. This is why tuition fee repayments are often referred to as ‘graduate tax.’

Proponents of this increase argue that it only affects the higher earning graduates. Most graduates won’t earn enough over the 40 years to pay back their loan, meaning the remaining balance will be written off and paid for by the Government. While this is true, the fact that a policy decision won’t adversely affect as many people as first thought isn’t in itself a compelling argument in its favour.

Aren’t taxes meant to disincentivise certain behaviours, while subsidies encourage? Shouldn’t we be encouraging people seeking to be educated?

If we want richer graduates to pay more, we can increase existing taxes on the rich; income tax, capital gains tax, and inheritance taxes to name a few. Why do we need a tax on graduates specifically – one that those with rich parents can opt out of by having their parents simply pay their fees up front? Those graduates avoid paying interest, while their peers from less affluent backgrounds end up paying more in the long run.

Aren’t taxes meant to disincentivise certain behaviours, while subsidies encourage? Shouldn’t we be encouraging people seeking to be educated? We all benefit from a well-educated society filled with doctors, scientists and engineers. We benefit culturally from having English graduates and historians, from having lawyers and musicians. The cost to train these people should be carried by the Government, out of general taxation, rather than individual graduates whose parents did not have enough money to pay fees up front. Tuition fees are a regressive tax on social mobility that should be abolished.

Tuition fees aren’t just bad for graduates; they affect current students too. Under this funding system, universities are encouraged to operate as businesses, with students as their customers. A profit-driven culture such as this drives poor decision making; for example, the Teaching and Learning Centre (TLC) cost Durham University £40m and is a building that is used by students on all courses; an example of spending that benefits the whole university. Meanwhile, the new Business School building cost £84m, and only benefits business students.

Why did Durham spend more than double the cost of the TLC on a shiny new building for business students? It’s because business courses are a cash cow; the MBA degree charges £40k in tuition fees per year, making it a lucrative source of cash for a university trying to make as much money as possible.

If we want to see the end of the money-grabbing, we need tuition fees to be abolished, maintenance grants to be reintroduced, and increased levels of Government investment into higher education as a public service

That £84m could have gone a long way towards renovating numerous other departments and classrooms. It could have helped subsidise the rising food costs and extortionate college accommodation costs on campus, which are continually increased to keep the cash flowing for the university. It could have gone towards research and teaching staff, who are so badly paid that it has previously been covered by the national press.

Students and staff are being wrung out for cash because of a funding structure that expects universities to be run like businesses and funded by student-customers rather than public funding. If we want to see the end of the money-grabbing, we need tuition fees to be abolished, maintenance grants to be reintroduced, and increased levels of Government investment into higher education as a public service.

Unfortunately, this is not the change that university leaders are advocating for. The profit-driven culture has resulted in the recruitment of university leaders who see their jobs as more akin to FTSE 100 CEOs than lead educators. The head of Universities UK (UUK), Vivienne Stern, welcomed the tuition fee increase and indicated that UUK would’ve preferred to see tuition fees increase with inflation all along. UUK explain that under that policy, students should currently be paying £15731 instead. The fact that university leaders are advocating for students to be even worse off rather than a meaningful solution to the funding crisis speaks volumes about their priorities. 

Universities used to be funded by the Government just like the NHS until merely a couple of decades ago. Our parents and grandparents benefitted from that system; it’s time for us to benefit from it too.

Image: Trevor Littlewood/ Wikimedia Commons