Are our universities too big to fail or could some really go under?
Cars loaded with clothes, mattress toppers , table lamps, posters, pots, pans and other paraphernalia of student life will hit the motorways today as the latest year group of freshers heads for campuses across Britain. Meanwhile, another cohort will be checking the latest Good University Guide to make their choices for their Ucas forms .
But if the dire warnings of last week are to be believed, will some of these institutions even be open for business in the next few years? The higher education sector is at immediate risk of collapsing under debts created by a decade of frozen UK students' tuition fees and a shrinking number of overseas students scared off by the hostile environment towards foreigners, which include spiralling costs for visas and fees.
That there is a funding crisis in higher education is beyond question. The 40 per cent of institutions expected to report a deficit this year can attest to that; further evidenced by the multiple redundancy programmes currently in place which are seeing an exodus of staff, including academics, at many universities . The crisis spans the entire sector, from highly selective Russell Group universities to some of the faster-expanding modern universities, created since 1992.
The University of East Anglia was the most high-profile university to hit financial problems last year, recording a £74m loss in the year to July 2022. More recently, Lincoln went public about the "financial headwinds" it was encountering, and there have been widely reported restructurings, budget cuts, and/or job losses at Goldsmiths, University of London; Coventry; York; and Cardiff . Many others, Russell Group universities among them, aren't in the headlines yet, but could soon be as courses stop running and departments close.
But while there may be some local disruption, no institution is likely to fail wholesale. It would be a bad look for UK higher education, still widely regarded as second only to the United States in terms of global reputation. No doubt the university regulator, the Office for Students, which many vice-chancellors tell me "has been asleep at the wheel", would step in and restructure institutions that come closest to the brink.
Who and what is to blame for the current situation is rather less of an issue, however, than what needs to be done to fix it. Vice-chancellors and bodies representing various coalitions of universities have taken to the airwaves in recent days to put forward potential solutions. And a worrying number seem to be looking squarely at students and parents to fix the problem.
Higher tuition fees for UK students have been mooted. Vivienne Stern, chief executive of Universities UK, went so far as to say that she believed most families would understand the need to increase tuition fees. She could not be more mistaken.
Families at all but the highest income levels are struggling to put their children through university. Where it can afford to, the bank of mum and dad is hugely subsidising the current system [to the tune of £100,000 in my own instance for three children], and children still emerge with an average student debt of £43,700.
With levels of interest rates on those loans ranging between 4.3-7.3 per cent, Professor Charlie Jeffery, vice-chancellor of the University of York, said: "Our students rack up some of the highest levels of debt in the world. And changes made by the last government have made repayment terms longer and more regressive, so nurses will end up paying more for their degrees than doctors, teachers more than bankers, women more than men."
Those changes included extending the student loan repayment period from 30 to 40 years meaning middle- and lower-income earners (like nurses) now face the prospect of almost a full working life of paying down student debt, while the corresponding cut to £25,000 of the threshold at which repayments start means higher earners (like doctors) will discharge their debt that bit more quickly.
The absurdly long period for student loan repayments is due in part to the scandalous rates of interest charged on student debt. My son left the University of Leeds in the summer of 2023. He had incurred about £48,000 of student debt over a four-year period in tuition and maintenance loans, yet by this week that debt had ballooned to £56,068.
He is one of almost 1.8m students with student loan debt of between £50,000 and £100,000. There are another 61,000 with debts of between £100,000 and £200,000, according to the latest figures from the Student Loans Company.
The present system could hardly be more unfair. Students and their families are currently paying for the decision taken by the Blair and Major governments of 20 and 30 years ago to vastly expand the UK higher education system as if they are the only ones to benefit from this sensible decision. And the poorest pay most of all with the highest maintenance loans only available to those from homes with an annual household income of less than £25,000.
"All the beneficiaries should pay for higher education – and both the individual and the state benefit," says John Cater, the UK's longest-serving vice-chancellor, who has led Edge Hill University since 1993. "Graduates get better jobs, pay more taxes, rely less on the NHS, are more likely to volunteer and contribute to society; so everyone gains and everyone – not just students and their families – should pay."
Which is what happens in many European countries with similarly high participation rates in higher education. In France, a bachelor's degree costs €175 (£147) a year, a masters programme costs €250 a year, with places at an engineering school coming in highest at €618 a year.
In Germany , all public universities are free with an administration fee payable of around €300 a semester. Higher education is also free in Denmark, Norway, Sweden and Finland.
The Netherlands charges more, but tuition fees of €2,530 per year are still a snip compared to the UK. Only in the UK, it seems, has the expansion of higher education to the great benefit of UK plc been uniquely funded by students and their families.
In the short term, at least, that will only continue.
With a "bad news" budget in the offing, it would seem a good time for chancellor Rachel Reeves to acknowledge the higher education crisis bequeathed by the Conservatives. This may well come in the form of a stopgap increase in UK tuition fees to staunch the bleeding – £9,600 per year or perhaps £9,750 at most, keeping the rate below the psychologically important £10,000 threshold.
This will buy time but has to be accompanied by a more extensive review of how the country pays for higher education and keeps its institutions open. There is no road left down which to kick the can. And all roads can't lead to students and their parents.
Reducing this burden on our young people has to be a priority for any review of higher education funding. Interest charges should be removed, or at the very least slashed to simply track the rate that the government pays to borrow. Other options that could replace the current broken system might include the introduction of a graduate tax which would at least ensure that those who gained the most financially from their university education paid the most for it.
The reintroduction of non-repayable maintenance grants also has support, possibly alongside a sharp increase in the amount of maintenance support available. "If we believe in social mobility, we must increase maintenance support, including the reintroduction of grants and not loans," says Paul Croney, vice-chancellor of Teesside University, which recruits from some of the most deprived parts of the country.
Croney, who has overseen the investment of more than £300m in facilities in the past decade without borrowing a penny, believes there needs to be bursaries for key workers to address recruitment issues in nursing, teaching and other public sector areas. "We have to make it possible for people to be able to enrol on courses that serve areas of the public sector that are desperately short of labour," he says.
And apprenticeships need to be part of any settlement, too. Some universities have thousands of degree apprentices enrolled on so-called "earn while you learn" degrees that leave students debt-free. Employers (among the key beneficiaries of our better-educated workforce) cover the cost of tuition. Those universities that have none need to get on board.
So, as the new academic year begins and the Class of 24 hits the campus for "the best three years of their lives", their parents at least will be listening intently to Rachel Reeves on 30 October. Her in tray may be overflowing, but the higher education crisis is too big to ignore.
Professor Alastair McCall is deputy director of the Centre for Education and Employment Research at the University of Buckingham and editor of the Daily Mail University Guide
