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First tuition fee hike in eight years: In a significant policy shift, England’s university tuition fees are set to increase for the first time in eight years, as announced by Education Secretary Bridget Phillipson. The government has decided to raise fees in line with inflation to sustain the future of higher education institutions.
From October 2025, the maximum fee for domestic undergraduate students will rise by £285, lifting the annual cost from £9,250 to £9,535. This change marks a departure from the eight-year freeze on fees, initially capped at £9,250 in 2017.
Addressing the financial health of universities in the uK
Phillipson highlighted that while increasing the fee cap was a difficult decision, it is a necessary step to ensure universities remain financially sustainable. The UK’s higher education sector has voiced growing concerns over financial viability due to stagnant fees and reduced international student numbers. Universities, facing a squeeze on resources, have been struggling with operational costs, with frozen fees only adding to their burdens. Phillipson stressed that this adjustment aims to secure a stable future for universities, even if it requires tough decisions.
Relief for students: Loan increases to match living costs
To alleviate the impact of rising living expenses, the government will also boost maintenance loans alongside tuition fees. For the 2025/26 academic year, maintenance loans will see a rise of up to £414, aiming to help students manage their daily expenses. Starting next year, these loans, along with tuition fees, will be linked to the RPIX inflation measure, currently set at 3.1%. This adjustment means the loan cap will increase to £10,544 for students living outside of London and £13,762 for those in London, providing essential financial support for students across different living situations.
A sharp decline in international student numbers
Another factor impacting university finances is the recent decline in international students, who typically pay significantly higher tuition fees than domestic students. According to Home Office data, there was a 16% drop in visa applications from overseas students between July and September of this year. This decline coincides with a recent policy change that restricts international students from bringing dependents, with exceptions only for specific postgraduate research programs and government-funded scholarships. This decrease in international enrollments has further tightened university budgets, making the fee increase even more critical for institutional stability.
Calls for increased funding and restored teaching grants
Universities UK (UUK), which represents 141 institutions, has urged the government to revisit teaching funding to address what it calls the lowest funding per student in nearly two decades. A recent UUK report warned that the current £9,250 fee is equivalent to just £5,924 in real terms, compared to the value it held in 2012, the London Standard reported.
The organization’s blueprint suggests linking fees to inflation and restoring the teaching grant to sustain educational quality and resources. Meanwhile, the Institute for Fiscal Studies (IFS) has projected that without ongoing adjustments, universities would continue to experience financial strain, possibly necessitating fees as high as £10,500 by 2029.
Government’s commitment to long-term higher education reform
Phillipson indicated that the current fee adjustments and loan increases are part of a larger governmental strategy aimed at reinforcing the financial health of universities. The Prime Minister’s office acknowledged the “severe financial challenges” faced by universities, with a spokesperson emphasizing that these measures are essential for keeping educational institutions afloat while narrowing the gap between disadvantaged students and their peers.
The government plans to unveil additional reforms aimed at ensuring long-term investment in the sector in the coming months, with Phillipson indicating that universities will also face new expectations around fiscal responsibility and value for students.
Scrapping maintenance grants and long-term implications
In recent years, the financial support landscape for students has undergone significant changes. In 2016, non-repayable maintenance grants were eliminated, leaving students reliant on repayable loans to cover their costs. While the increased loan caps offer some relief, they highlight the shift away from grants and toward loans, which are subject to interest and inflation adjustments. The recent adjustments aim to bridge the funding gap and provide better support, though some advocate for the return of grants to better address student needs.
Universities facing new expectations
The government’s upcoming reforms will not only focus on funding but also on ensuring accountability. Phillipson mentioned that universities would need to adopt better financial practices and demonstrate value to both students and taxpayers, the BBC reported.
This includes potential scrutiny on executive salaries and other expenditures within the institutions. As part of a broader approach, the government intends to drive reforms that emphasize cost-effectiveness and enhanced outcomes for students, signaling a new era of governance in higher education.