Universities in crisis: can government fix their funding woes?

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University finances are increasingly becoming cause for concern, with possible solutions seeing policymakers divided. Domestic student fees have been frozen at £9,250 since 2012. The cap was brought in to deliver better value for money for students. However, the climate of 2024 is a very different one to 12 years ago. Brexit has seen a loss of EU research funding; inflation has seen the value of student fees decline to £6,500 in real terms.

Therefore, UK universities have arguably become overly reliant on international students, who notably pay significantly higher fees. These can vary by course and institution but at Durham, one year of undergraduate study amounts to £24,900 for an international student studying Combined Honours in Social Sciences, for example. This has led to a subsequent demand for international students to plug the gap created by the domestic fees cap, as highlighted by increased expenditure by universities on agents to secure international students, with Durham’s own spending tripling in the last seven years.

Where this dependency becomes worrying is when one considers the risks of geopolitical shifts and the possible impacts on international students and migration. In a 2023 report, the House of Lords cited a “worrying complacency” in these UK universities.

So, universities have a dilemma: to ease their dependency on international students by taking a greater proportion of home students is financially unfeasible, hence their dependency in the first place. To mitigate this with the most obvious suggestion of raising the cap on domestic student fees would be highly unpopular; doing it would completely overlook the principle of students’ value for money – especially in a post-Covid world where hybrid learning has been normalised and reform to student loans meaning today’s students will be paying back more of their loans and for longer than ever before. This compounded with disruptions to learning through strikes and last year’s marking and assessment boycott sees any proposals to raise domestic fees as unjustifiable given the rationale the cap was founded on. While this may be the preferred solution of university vice-chancellors, the higher education minister, Robert Halfon has stood firmly against it. Mr Halfon argued that given the current cost of living crisis, raising tuition fees is “not going to happen, not in a million years.”

The funding model… is unfit for purpose

Politicians not wanting to take an unpopular move will come as a relief to many students. However, with universities prophesising doom and dark times ahead and former Conservative minister Jo Johnson’s grave warning of universities “falling over one by one,” an alternative solution is needed, urgently.

Another proposal is to place caps on international student intake. Similar measures have been seen in Canada who have capped their admittance of foreign students for 2 years in an attempt to address housing and healthcare pressures in the country. As a result, there will be a 35% decrease in approved study permits. Could this be a possible solution for UK universities? While this will help insulate universities from the whims of ‘geopolitical shifts’, and cut spending on recruitment of international students, it does not address the financial pressure these higher education institutions are under. Once again, it is important to note that it is these very financial pressures that have brought universities to this point.

What is clear is that the funding model for UK higher education is unfit for purpose. It is one thing to criticise the growing dependency of UK universities on international students, but to just ask them to limit their intake merely addresses the symptom rather than the cause. Furthermore, it is problematic to suggest that individuals should foot the bill, especially in a cost-of-living crisis where students are paying more than ever before. None of these proposals address the structural issues at play, suggesting that the whole system of university fees needs re-thinking. University fees have undergone substantial changes over the last 30 years but further refinement is needed. Government funds universities both directly and indirectly through student loans. While there has been the cap on domestic fees, the direct funding has also been subject to numerous cuts over the years.

Rather than putting yet more pressure on students or suggesting unsustainable solutions for higher education institutions to undertake on their own, perhaps we should be looking at the government. As one Universities UK spokesperson told The Guardian, “It is essential the HE sector and government work together to achieve a long-term approach that meets the needs of our world-leading institutions, students, and the public.”

Image credit: John Robinson via Wikimedia Commons

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