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 2012–13 to £3.3 billion in 2024–25, in real terms. Students now expected to fund 84% of the cost of their degrees, up from 52% in 2012–13.
Key findings
- Students now expected to fund 84% of the cost of their degrees, up from 52% in 2012–13.
- 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 2012–13 to £3.3 billion in 2024–25, 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 2012–13 to 0.12% in 2024–25.
- 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
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
Vivienne Stern MBE
Chief Executive of Universities UK
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 2012–13 to £2,560 in 2024–25. 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 2021–22 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 2012–13 to 0.12% in 2023–24.
Total funding for students as a proportion of GDP has held broadly steady at around 0.9–1.0% 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 2020–21, 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, said:
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.
Vivienne Stern MBE
Chief Executive of Universities UK
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”.
Maike Halterbeck
Partner at London Economics
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.
Want to learn more?
Read our Insights and Analysis piece which explores how the balance has shifted from government to graduates