- Students now expected to fund 84% of the cost of their
degrees, up from 52% in 201223.
- New analysis for Universities UK from London Economics finds
the government's contribution to funding English undergraduate
students studying in England has fallen from £8.9 billion in
201213 to £3.3 billion in 202425, in real terms.
- As a share of the economy, the public's investment in
students' education and support has fallen by more than
two-thirds, from 0.42% of GDP in 201213 to 0.12% in 202425.
- The new data comes as Treasury Select Committee recommends
that in the long term, the government should return the balance
between the individual and the state to a 50:50 split'.
Students and graduates are now covering the great majority of the
cost of a degree, as government has stepped back its own
contribution. New research for Universities UK, published today,
and carried out by London Economics, shows that the government's
share of the cost of educating and supporting English students
has dropped from 48% to 16% in over a decade, leaving students
and graduates to cover 84%.
For every full-time student, the amount that the government
expects to contribute to teaching and maintenance has fallen by
71% in real terms, from £8,840 in 201213 to £2,560 in 202425.
Over the same period, the corresponding amount that students and
graduates are expected to contribute for teaching and maintenance
has risen by 51% from £9,160 to £13,800.
Public investment in universities delivers strong returns:
according to previous separate research carried out by London
Economics, every £1 of public funding invested in universities in
202122 generated over £14 for the UK economy. Yet, as a share of
the economy, the public's investment in the education and support
of English undergraduates in England has fallen by more than
two-thirds, from 0.42% of GDP in 201213 to 0.12% in 202324.
Total funding for students as a proportion of GDP has held
broadly steady at around 0.91.0% over the period but only because
students and graduates have filled the gap left by government,
and that is now spread across more students than ever.
The financial pressure on universities has intensified in recent
years. The total funding they receive from fees and government
grants to teach each full-time student has dropped by 23% in just
four years since 202021, from £12,220 to £9,450, as the frozen
fee cap lost value to high inflation. Universities are educating
more people than ever, but with less to spend on each of them.
The findings come just before the OECD publishes its annual
Education at a Glance report for 2026, which has historically
shown the UK spending relatively high per student while
government contributes a low share compared to other developed
nations. This new analysis from London Economics explains that
apparent contradiction: when looking at teaching and student
support, HE investment has seen a significant decline and much of
what is counted as spending on higher education is in fact money
that students and graduates repay themselves.
Vivienne Stern, Chief Executive, Universities UK: This analysis
shows that, over time, successive governments have been shifting
more and more of the cost of getting a degree onto graduates.
When the fee system was introduced, it was designed to be a
co-payment model. Not 100% state-funded like schools; not 100%
privately funded. But the balance is now badly out of whack. We
need a reset, which recognises that we all benefit when a student
studies for a degree. The Treasury makes a profit on investing in
graduates because of the higher tax and national insurance
contributions they make, and society benefits from graduates
staffing public services and driving economic growth.
Government research published last week shows that English
universities make a loss when they teach UK students, for almost
every subject. In all four nations of the UK, we need a new
long-term plan for higher education, and sustainable basis for
funding the high-quality education this country is famous.
Maike Halterbeck, Partner at London Economics, said: The many
changes to the higher education funding system that have been
made over time make it extremely difficult to understand how the
overall funding envelope has evolved. Understanding the relative
contribution from the Exchequer vs students/graduates is even
more challenging. This analysis sheds light on this evolution,
showing that both total teaching and maintenance funding per
student has declined over time, as has the Exchequer
contribution. In an increasingly constrained fiscal and wider
economic environment, there are some very difficult choices
ahead.
The Treasury Select Committee has raised this shift directly,
recommending that government return the balance between the
individual and the state to a 50:50 split in the long run. The
current balance stands at 84:16. The Committee has also
questioned the accuracy of government's own estimates of what it
invests in higher education; this analysis provides a
comprehensive account of where the money comes from.
The findings hold across a range of assumptions: even under the
most cautious scenario tested, government's share still falls
substantially over the period.
ENDS
Notes to editors
Analysis by London Economics for Universities UK, Tracking higher
education funding in England (2026).
