Governance News Alert: Department for Education (DFE) Tuition fees rise: Higher education reform to back opportunity and protect students

Department for Education (DFE): Tuition fees rise: Higher education reform to back opportunity and protect students

Bridget Phillipson, the secretary of state for education, has announced that tuition fees are to rise in line with inflation in a bid to stabilise the higher education financial situation, alongside an inflation-linked lift to maintenance loans. In exchange, the government is calling on universities to “significantly step up work to boost access for disadvantaged students and break down barriers to opportunity”. 

The announcement from the Department for Education can be found here.

Full details of the changes can be found here.

At-a-glance:

• For the academic year 2025/26, the maximum tuition fee will rise by 3.1 per cent to £9,535 a year, an increase of £285. Part-time fees will rise to £7,145 a year, an increase of £210 and accelerated degrees by £340 to £11,440
   
• An increase in maintenance support of 3.1 per cent will provide up to £414 extra per year to students in London, £317 for students elsewhere and £267 for students living at home. For graduates, there will be no difference in monthly outgoings as a result of these changes. The repayment threshold will remain at its current level of £27,600 a year, as will the write off level of 40 years for outstanding loan debt
   
• A further package of reforms will be announced in coming months, focusing on how universities can “significantly step up” work to boost access and break down barriers to opportunity. These “major reforms” will focus on widening access, raising teaching standards, value for money for students, efficiencies and the pay of top teams
   
• Maximum tuition fees for classroom-based (business, humanities, social sciences) foundation years will be reduced to £5,760 from the start of the 2025 to 2026 academic year (£4,315 for part-time courses). Maximum tuition fees for foundation years in non-classroom-based subjects (science, engineering, medical subjects, creative and performing arts) will increase by 3.1 per cent to £9,535 from 2025/26 
   
• Students undertaking the final year of a standard full-time course completed in less than 15 weeks will be charged up to 50 per cent of the maximum tuition fee.
   
• Students undertaking a work placement year for a sandwich course will be charged up to 20 per cent of the maximum standard full-time or full-time accelerated tuition fee.
   
• Students undertaking an overseas year of study or Turing Year will be charged up to 15 per cent of the maximum standard full-time or full-time accelerated tuition fee.
   
• Eligible students undertaking courses at approved (fee cap) providers will qualify for tuition fee loans to meet the full cost of their tuition in the 2025 to 2026 academic year.
   
• The Lifelong Learning Entitlement (LLE), which will introduce a credit based system, will now launch in academic year 2026/27 rather than 2025/26, to give institutions the necessary time to prepare for the new system
   
• As it stands, there will be no link between fee levels and the outcomes of the most recent Teaching Excellence Framework (TEF), although legislation does allow for this
   
• If tuition fees had been increased yearly by inflation they would have now reached between £12,000 and £13,000. The £9,250 fee is currently worth £5,924 in 2012-13 prices

Implications for governance:

After a tuition fee freeze lasting seven years - during which time inflation soared to a peak of 11 per cent – the Labour government has announced a £285 rise to the cap.

Bridget Phillipson, the education secretary, said the government was taking the “tough decisions needed to put universities on a firmer financial footing” so they can deliver economic growth and more opportunity for students.

For university and college governance teams, the modest funding boost will come as a relief.

However, the small increase is outweighed by the increased staff costs announced in the budget, with higher national insurance contributions adding nearly £400 million to the sectors wage bill.

It is also unlikely to make up for the loss in international student fee income this year, following visa changes which removed the right for students below PhD level to bring their dependants with them. 

While acknowledging that the fee increase will be insufficient to offset these losses, credit agency Moody’s still described the government announcement as “credit positive for English universities” and a sign of a willingness to address structural underfunding which “signals a more supportive policy environment for universities”. 

According to Nick Hillman, director of the Higher Education Policy Institute, however, the extent of the rise barely allows universities “even to stand still – unless there are also to be extra government grants via the Office for Students”. Without this, worries about financial instability will continue, he predicted.

An uplift in student maintenance loan levels was generally welcomed but Carl Cullinane, director of research and policy at the Sutton Trust, warned that the increase would “barely scratch the surface” of what is required.

Speaking to the Commons, the education secretary promised more “proposals in the coming months”, many of which put the onus on universities to deliver more. 

Governors will wish to note government priorities for the sector in the coming review, include expanding access and improving outcomes for disadvantaged students; supporting adult learners through increased flexibility for retraining; and collaboration with Skills England, employers, and further education partners to deliver skills and cement institutions as civic anchors.

Proposals are also expected on “elevating teaching standards”, ensuring all students “receive good value for their investment” and “preventing wasteful spending and justifying top executives’ pay”.

Universities UK’s recent blueprint aligns with many of these priorities, for instance by suggesting measures such as a more consistent approach to contextual admissions, a focus on low participation neighbourhoods, better support for students ,and efficiencies through better use of technology, shared services, collaborations and commercialisation.

Vivienne Stern, UUK chief executive, said its new Efficiency and Transformation Taskforce would work with university leaders and the government to make the sector as “efficient and effective as possible”.