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Higher Education: Finance

Question for Department for Education

UIN 93856, tabled on 15 December 2021

To ask the Secretary of State for Education, what recent assessment he has made of the potential effect of rising inflation on the funding of the higher education system since student fees were capped at £9250.

Answered on

6 January 2022

The government is committed to a sustainable funding model for higher education (HE) that supports high-quality provision, meets the skills needs of the country and maintains the world-class reputation of our HE sector, while sharing its costs fairly between graduates and the general taxpayer.

Tuition fee levels must ensure that universities continue to be properly funded, while representing value for money for students and taxpayers, not all of whom will have wanted to go to university. Maximum tuition fees for standard full-time courses will remain at £9,250 for the 2022/23 academic year. This will be the fifth year in succession that maximum fees have been frozen, providing better value for students and keeping the cost of HE under control.

Since 2012, total income for universities in England has increased by around £7.4 billion in real terms. Income from tuition fees is augmented by the Strategic Priorities Grant, which is paid directly to providers, and totals £1.4 billion in academic year 2021/22. On 19 January 2021, the former Secretary of State for Education wrote to the Office for Students (OfS), setting out his priorities for reform of the Strategic Priorities Grant for the 21/22 academic year. These reforms include the reallocation of high-cost subject funding, towards the provision of high-cost subjects that support the NHS and wider healthcare policy, high-cost STEM subjects, and subjects meeting specific labour market needs. As a result, the total funding for high-cost subjects, such as medicine, engineering and other high-cost subjects, is 12% (£81 million) higher in the 2021/22 academic year compared to 2020/21.

Students from the lowest income families have access to the largest ever amounts of living costs support in cash terms. Maximum grants and loans for living costs, which are a contribution towards a student’s living costs while attending a university, have been increased by 3.1% for the current 2021/22 academic year, with a further 2.3% increase announced for 2022/23. Annual increases in maintenance support from government are based on inflation forecasts for the first quarter of the calendar year after the start of the academic year (using the All Items Retail Prices Index less mortgage interest payments (RPI-X) measure) provided by the Office for Budget Responsibility.