New analysis of tuition fee data reveals the decline in real-terms value, alongside deficits in teaching and research grant funding
- Analysis by the Russell Group suggests the real-terms value of the annual tuition fee has now fallen by around 26% since 2017
- The Strategic Priorities Grant (SPG) has also declined in real terms, by 19% between 2018/19 and 2025/26
- This fall underpins the financial challenges universities are experiencing, amplified by deficits in government funding for research
- The Russell Group has reiterated sector calls for the government to confirm this year’s inflation-linked rise in tuition fees will continue annually and to review the SPG to increase per student funding
Maximum undergraduate annual tuition fees for next year will be worth an estimated £6,700 in real terms – approximately two-thirds of the sticker price of £9,535 – new analysis by the Russell Group has revealed.
Calculated using GDP deflators from the June 2025 ONS Quarterly National Accounts (QNA), the analysis reveals the erosion in value of the tuition fee has continued steadily since 2012, with a particularly steep drop between 2021 and 2025 as inflation grew and tuition fees remained static.
This decline reflects the core financial pressure universities face as they seek to cover the growing shortfall in funding for teaching UK students, so they can continue providing high-quality education and the graduate skills the country’s workforce needs.
If shortfalls in funding across teaching and research are adequately addressed, research-intensive universities say they could make a significant impact on the government’s economic, health and opportunity missions, and help drive a successful industrial strategy. But HE leaders are warning that financial pressures could hamper these efforts.
The deterioration of the value of tuition fees is further amplified by rising costs and the ever-growing deficits in government funding for both teaching and research.
Calculations show that the Strategic Priorities Grant (SPG), intended to support student success and high-cost teaching in priority subjects, has also decreased in real terms. SPG funding increased from £1.29bn to just £1.35bn between 2018/19 and 2025/26, a real terms decrease of 19% when accounting for inflation.
These financial pressures are compounded by shortfalls in research funding. A 15% real-terms decrease in quality-related research (QR) funding, together with falling cost-recovery on research grants, has led to an increase in the investment universities are making to support a thriving UK research base: up from £3.9bn in 2016/17 to £6.2bn in 2023/24.
Almost all publicly funded research falls short of covering the cost of delivery. However, this gap has steadily increased over the past decade.
The mounting financial pressure on universities across the sector is well-documented, but the Russell Group says the new analysis of tuition fee income lays bare the extent of the shortfalls, which have become entrenched over time.
Meanwhile, concerns about the UK’s place in the international student recruitment market have grown since the publication of the government’s immigration white paper, putting at risk universities’ largest source of income to cross-subsidise teaching and research deficits.
Dr Hollie Chandler, Director of Policy for the Russell Group, said:
“The government’s decision to uplift tuition fees for the coming academic year was a welcome move, but these figures demonstrate the size of the challenge we still face. The rise does not make up for close to a decade of frozen fees, a period that has also seen high inflation, rising operational costs and decreases in government funding.
“Universities have the right combination of quality teaching, student support, science and research power, and global and local connections to make a huge contribution to social mobility and national and regional economic growth. But the gap between the funding we receive and the cost of delivering these vital activities could prevent the sector from fulfilling its full potential.
“Universities are doing all they can to mitigate financial pressures, but without action from government, difficult decisions around course provision and research investment are becoming unavoidable. We want to work in partnership with the government to develop a sustainable funding plan and a stable policy environment.
Increasing per student funding through the SPG and raising tuition fees by inflation each year to prevent further erosion, along with greater maintenance support for students, would be a fair and reasonable step, and a statement of positive intent as the government considers long-term reform for the sector.
See the Russell Group’s full analysis in the new briefing paper, Higher Education Funding.
Notes:
- Tuition fee and SPG value declines were calculated using GDP deflators from the June 2025 ONS Quarterly National Accounts (QNA) release.
- Academic year deflators were calculated by applying the official HM Government methodology, which weights two-thirds of the deflator for the financial year starting in April and one-third of the following year’s deflator, reflecting the August-July academic cycle.
- Recent figures show 43% of English providers are forecasting a deficit for 2024/25, with universities in Wales, Scotland, and Northern Ireland facing even more acute challenges due to differing funding models (Financial sustainability of higher education providers in England 2025, Office for Students, 2025)
- 49% of universities recently surveyed by Universities UK have closed courses in the past three years, and 18% have shut down entire departments. 19% of universities have reduced investment in research in the past three years, and 79% are considering future reductions (Universities grip financial crisis - but at what cost to the nation?, Universities UK, 2025)
