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Tuition fees: Why Education Secretary Bridget Phillipson has increased university fees and how Kent’s universities have reacted

Tuition fees are to rise for the first time in eight years in a move welcomed by universities but likely to attract a backlash from students.

Undergraduates have seen fees capped at £9,250 per year since 2017 - but in an announcement made today in the House of Commons by Education Secretary Bridget Phillipson, that is set to finally increase.

Education Secretary Bridget Phillipson. Picture: Lucy North/PA
Education Secretary Bridget Phillipson. Picture: Lucy North/PA

The fees will rise in line with inflation, with the price hikes starting next year. It means graduates will pay £9,535 a year for courses starting in the next academic year. That’s an increase of £235 or 3.1%.

In addition, maintenance loans will also rise with inflation - up by an additional £414 a year.

The government say further reform to universities will be announced over the coming months.

It comes as university bosses have complained the fees have remained capped while costs have spiralled, leaving many in a precarious financial position.

The University of Kent, which has campuses in Canterbury and Medway, revealed it lost £12 million over the year ending July 31, 2023 and had net debt of £68.5m.

The University of Kent has faced serious financial challenges in recent years
The University of Kent has faced serious financial challenges in recent years

It said the sector was facing “major financial challenges” and was bracing itself for a £31m loss over the 2023/24 year - final figures of which have yet to be revealed.

A spokesperson for the university said: “With running costs continuing to rise, it's important the government focuses on measures to shore up the financial sustainability of one of the UK's world-leading sectors.

“This type of change will help us continue to invest in our students' experience and outcomes, prioritising support packages that help students manage the cost of university and delivering the skills that employers need.

“It's also very welcome to see maintenance loans increasing as part of the changes, helping support our wider work of ensuring that anyone - regardless of background - can access the benefits of a university education.”

Its financial struggles - along with many other universities - have resulted in cuts to both staff and courses over recent years. It also closed a campus in Brussels this year due to declining numbers.

Graduates will not have to pay anything extra yet - only when they cross the threshold for repayment of their student loan
Graduates will not have to pay anything extra yet - only when they cross the threshold for repayment of their student loan

Ian Reeves is the former head of department for the Centre for Journalism at the University of Kent’s Medway campus. He believes the government has not gone far enough.

He said: “The problem is the university fee system is completely broken. And none of the main parties have really wanted to grasp the nettle of doing a full and proper review of how universities are funded. It's really politically difficult to handle and Labour has essentially fallen into the same trap. Therefore it looks like they are going to continue with the existing system. But just at a slightly higher level of fees, and that is not the answer.”

It is thought 40% of higher education institutions will be in deficit in 2023/24, with the non-partisan Higher Education Policy Institute think tank suggesting “one or even a small handful of institutions could soon be insolvent” unless steps were taken.

In addition to tuition fees remaining stagnant in recent years, there has been a dramatic drop in the number of overseas students - who pay considerably more for their tuition - as a result of tough new conditions on visa conditions and bringing dependants with them, introduced earlier this year.

Overseas students pay, on average, between £11,400 - £38,000 for undergraduate degrees. Fees for overseas students are not capped and have traditionally capitalised on the UK’s university education reputation.

Education secretary Bridget Phillipson and PM Keir Starmer
Education secretary Bridget Phillipson and PM Keir Starmer

Fees from overseas students once accounted for close to a quarter of universities’ income meaning the sharp decline - down 16% this year - will have a significant impact on their bottom line.

The previous government raised the cap on university tuition fees in England to £9,000 per year in 2012, but it has been frozen at £9,250 for domestic undergraduate students since 2017.

Most graduates currently studying will pay back their student loan - which includes the fees - once they are earning in excess of the £25,000 a year threshold to trigger repayments.

But students currently at university - or planning to - shouldn’t let today’s announcement deter them.

Consumer champion Martin Lewis explained: “Higher tuition fees won’t change what most pay each year. For most, they're paid for you by the Student Loans Company and you repay afterwards only if you earn over the threshold.

Money expert Martin Lewis
Money expert Martin Lewis

“The amount you repay each year solely depends on what you earn, not on what you borrow.

“Increasing tuition fees will only see those who clear the loan in full over the 40 years pay more. That is generally mid to higher earning university leavers only, so the cost of increasing them will generally be born by the more affluent.

“Changing tuition fees is a more obvious rise, but in reality has far less of an impact on the amount most will repay.”

Universities UK (UUK), which represents 141 universities, recently called on the government to increase funding for teaching in England by linking tuition fees to inflation and restoring the teaching grant.

Speaking in September, UUK president Professor Dame Sally Mapstone said: “The major problem with university finance is that for the past eight to nine years, direct government grants and fees haven’t kept up with the cost of teaching and with inflation, so more and more institutions are facing a budget deficit overall.”

The Sibson building at the University of Kent - built during a period of boom for universities
The Sibson building at the University of Kent - built during a period of boom for universities

The blueprint from UUK, published in September, warned that teaching funding per student in England was at its “lowest point since 2004” and the current £9,250 fee would have been worth £5,924 in 2012/13.

In the UK, the government covers 16% of higher education’s costs – the lowest in the developed world.

But tuition fees have become a major political hot potato in recent years.

Prime Minister Keir Starmer said when running for leader of the Labour Party he wanted to look to abolish the fees - before reversing that pledge and, now, increasing them further.

First introduced in 1998 – under the Labour administration of Tony Blair – the costs then were a mere £1,000 a year.

Acting vice chancellor at the University of Kent, Professor Georgina Randsley de Moura. Picture: University of Kent
Acting vice chancellor at the University of Kent, Professor Georgina Randsley de Moura. Picture: University of Kent

Initially, the fees ensured universities could increase their numbers as demand increased.

In 1994, nationwide, applicants accepted on to the first year of a course stood at 271,000. By 2022, that number had more than doubled to 563,000.

But by then, the tuition fees cap was already in place - leaving universities having to service loans for their expansions while still paying for all the rising costs they faced, particularly during a period of sharp inflation and soaring energy bills.

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