Degrees of Debt: Unpacking the Value of Higher Education Amid Rising Tuition Fees”

On Monday the government announced that university tuition fees will rise to a maximum of £9,535. This is a stark contrast from one of Starmer’s2020 leadership campaign pledges to abolish tuition fees, and once again we are returned to the issue of higher education funding and addressing the elephant in the room: maintenance funding. 

Earlier this year I wrote about the double standards of having student finance means-tested whilst outrage followed the idea that pensioners might have their winter fuel payment paid the same way. This time we’re dealing with the same issue in different clothes, students being overlooked, and our future taken for granted. 

Reeves’ budget last week was “thin gruel” for the higher education sector according to UCU General Secretary Jo Grady, and that universities up and down the country have been crying out for funding.Education Secretary Bridget Phillipson addressedconcerns over university funding in the Commons, announcing the first tuition fee increase in eight years as a necessary measure to stabilize the sector. A pretty tough, and, dare I say it, controversial decision given it was just four years ago that we were talkingabout radical moves as abolishing tuition fees – once a Labour Party commitment. 

Going back on promises may come back to bite Starmer’s Labour Party, a lesson learnt the hard way by the Liberal Democrats. Yet, Phillipson said that the choice to raise the cost of a university education was another “tough” decision necessary to bring the country out of the situation they have inherited after 14 years of Tory rule, and the “first step” in the road to reform of the HE sector. And this is a sector very much in need of reform – one propped up by international students, and a leg that is becomingly increasingly difficult to stand on based on a 16% decline in visa applications compared to last year. 

Tuition fees have been repeatedly frozen since 2016, meaning that universities have suffered “real terms-decline in income”, with 40% of universities and higher education institutions in deficit in 2023/24 according to the Higher Education Policy Institute. The Chief Executive of Universities UK, Vivienne Stern, quipped that whilst nevertheless a difficult decision, the rise in tuition fees was “the right thing to do”. 

Vice President for Higher Education at the National Union of Students, Alex Stanley claimed that students were being asked to “foot the bill to literally keep the lights and heating on in their uni buildings and prevent their courses from closing down”. Whilst this assessment certainly says a lot about the need for funding to be directed to universities, it raises questions about the morality in making students pay for what is effectively one of our most important public services. 

Grady at the UCU, in a damning response to Phillipson’s decision, said: 

taking more money from debt-ridden students and handing it to overpaid, under-performing vice-chancellors is ill-conceived and won’t come close to addressing the sector’s core issues

The UCU condemned the fee hike as “economically and morally wrong”, with their Alex Stanley claiming the move “can only ever be a sticking plaster”, and Save the Student’s Tom Allingham adding that it is the equivalent of rubbing “salt into the wounds of students”. 

Allingham goes further to address what he feels is the biggest issue; that is the huge real-term cuts to maintenance funding that are having a drastic impact not only on students and their cost of living, but also their academic engagement – in other words, the entire reason they’re at university in the first place.Several students from universities across the country shared their views, highlighting personal financial struggles and the impact of rising fees.

Éloïse, a Hispanic Studies and Politics student at Queen Mary University of London says that the maintenance loan she receives doesn’t cover her rent for the cheapest accommodation on campus, leaving it up to her to finance the rest through her part-time job and savings.

In Éloïse’s view, despite the fee increase, university remains the fastest way to increase social mobility, but believes that the basic maintenance loan should do the bare minimum of covering her rent for the year. Another student I spoke to, also at Queen Mary, believed that this should go further and do more to help commuting students with their transport costs. 

Maintenance funding aside, Asjad, a psychology major at the University of Plymouth, hinted at his future self’s concerns around student debt he will incur throughout his time at university, adding that this may deter people from less advantaged backgrounds away from university altogether. Whilst Tom Allingham at Save the Student did admit that the tuition fee hike announced on Monday will “make little difference to overall levels of student debt, and will have no impact whatsoever on the amount a graduate repays each month” it has come at a time where students are facing enormous financial pressure. 

Higher education institutions and students alike are crumbling under this pressure – quite literally, Asjadat Plymouth pointed out, who believes more can be done to ensure students have access to better facilities – but asking students to foot the bill has not been received well by the sector. 

Even the international students I spoke to, who came to the UK because of its outstanding universities and research, have admitted that what they have experienced falls short of what they expected. With students and institutions alike voicing concerns, the UK’s higher education system faces a critical juncture. The upcoming government term presents an opportunity for meaningful reform that supports students’ academic pursuits and financial stability and secures universities’ futures. 

Maintenance support must be raised to combat student poverty and allowing students to excel academically by not always worrying them about their finances. A good start would be restoring the generosity of maintenance support to 2020 levels, which represents a 16% increase for the 23/24 cohorts. While this would necessitate issuing £1.5bn in maintenance loans, the majority would be repaid and the total on-run cost to the government would sit at £0.4bn. 

Other wider, wholesale reforms suggested by the Institute for Fiscal Studies include: 

Repayments, not depending on a borrower’s income, being made over a certain number of years like a normal mortgage-style loan. This system is common abroad but risks higher levels of default.

Costs shared by all taxpayers, including non-graduates, although this is unlikely to be a vote-winner.

A graduate tax, or supplementary income tax for graduates. Similar to an income-contingent loan, this could potentially generate much higher repayments from very high earners. 

One thing is clear, serious reform needs to be made to ensure students and universities are on firmer financial footing.

Archie Rankin is a Fellow at the Sixteenth Council.