Funding crisis hits UK universities

United Kingdom universities have been a good reason to forgive the clumsy pride of Brexit. They are the jewel in the crown of a country whose higher education can still boast its excellence. The country hosts seventeen of the hundred best universities in the world. And they also constitute a first-class source of income. It is estimated that they contribute more than $147 billion to the country’s economy. However, they are currently suffering a crisis that could put their global preeminence at risk.

A British student who wants to enroll on an undergraduate or postgraduate degree course has to pay £9,250 per year in tuition (about $10,800). The amount has been capped by law for a decade, leaving universities to face rampant inflation and competition from other institutions that has forced them to hire teaching staff with attractive salaries and offer a wide variety of degrees and courses. It is an astronomical figure when compared to tuition fees in other countries, such as Spain, where fees can vary between €680 and €1,280 ($738 and $1,390) per year.

Until 1998, access to higher education was absolutely free in the United Kingdom. It was Tony Blair’s Labour government that opened the tap, given the growing demand for workers with a university degree. The system of student loans has continued to guarantee access to higher education for many U.K. students, but it is not enough to finance a sector that has become a competitive and sophisticated business.

The Russell Group, the association that represents twenty-four of the most prestigious British higher educational institutions — Cambridge, Imperial College and the London School of Economics, among others — calculates that, in the current climate, each British student represents a near loss of $3,250 per year, which could reach $6,500 at the end of the study period.

The way forward

Most universities compensate for their financial stress with foreign students, who account for 20% of income, and can represent up to £32,000 per year (about $40,700) in tuition. They are mainly Asian students, since Brexit eliminated access to U.K. universities for EU students under the same conditions as British, and has kept them considerably away from universities in the United Kingdom.

Students from India, China, Nigeria, and Bangladesh now account for 10% of the students in the most popular higher education establishments in England, but in recent months alarm bells have been ringing. And the anti-immigration discourse of Rishi Sunak’s government, which faces a difficult election this year, has had a lot to do with the decline.

The recent announcement by Downing Street that it was considering eliminating the right of master’s students to bring family members with them to the United Kingdom — the so-called graduate visa routes (temporary work permits for graduates) — has discouraged many aspiring students from taking the leap.

“The graduate route is an essential part of the U.K.’s appeal to potential students. Many of our competitors offer even more attractive things. International students make a net contribution to the country’s economy of around $50 billion a year, which is something that benefits the entire United Kingdom,” warned Vivienne Stern, the executive director of Universities U.K., which represents and defends the interests of more than 140 higher education institutions. “No one wants the system to be abused, and we are willing to work with the government to prevent it. But it is advisable to rule out the idea of completely eliminating temporary work permits,” the association has claimed.

According to data from the University Admissions Service (UCAS), which the Financial Times has thoroughly examined, nearly a third of British educational institutions have seen the number of admissions applications from foreign students not from the EU cut by a third. Some universities, such as the University of York, have decided to significantly reduce the academic qualifications required of foreign students to be able to enroll in their degrees.

A study carried out by the consulting firm PwC for Universities U.K., based on the financial income of nearly 70 British institutions in the 2021-22 academic year, estimates that by the end of 2024, 40% of them will be operating at a loss. And the solution, the report suggests, can only come in two ways: increasing the number of enrollments of foreign students or increasing the price required of national students. A few months before an election in which the Conservative Party is risking its future, neither of the two answers is attractive for Sunak.

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