New essay published on the financial sustainability of higher education institutions

11 April 2024

The Russell Group has highlighted the urgent risks to the sector’s long-term financial health, in a new report by the Higher Education Policy Institute (HEPI) presenting options for the future of higher education funding. 

In the collection of essays published today (Thursday 11 April), expert voices across the sector propose a range of potential funding models for undergraduate education, while exploring the growing financial pressures and sustainability concerns facing the UK’s universities. 

In the final chapter, ‘Financial sustainability of higher education institutions’, Lily Bull, Policy Manager at the Russell Group, delves into the key challenges to the sector’s long-term financial resilience; with new Russell Group analysis suggesting English universities would need to find an extra £6.5 billion by 2030 just to maintain the same levels of domestic education and R&D. 

Commenting on the new report, Lily Bull said:

“Throughout the last decade, amid a series of policy changes, many working in the sector have been warning of a significant impact on the long-term financial resilience of our universities. We are now seeing this play out as the first signs of mass change – course closures and redundancies – are becoming evident. Without intervention, there will not only be an impact on individual students and staff as choice is restricted and jobs are cut, but these changes will inevitably alter the overall university offer – including the R&D that is so vital to the growth of the UK economy and our position on the world stage. 

“Today’s report raises some interesting ideas on the potential direction of reform for the sector. Now is the time to explore what we want our universities to look like for future generations, and how we can create a more resilient sector now and into the future. We are keen to work with the Government to develop a long-term, sustainable funding system that works for both students and taxpayers”. 

The essay, ‘Financial sustainability of higher education institutions’, can be found within HEPI’s collection How should undergraduate degrees be funded?, edited by Rose Stephenson and available now on the HEPI website. 

The report comes as financial pressures build in other areas: with vital cross-subsidy from international student tuition fee income looking increasingly vulnerable, and an increase in spending on additional student support, as cost-of-living challenges persist and maintenance loans fail to keep pace with inflation. 

See the Russell Group’s University Business Model Explainer for more details about the funding model for research-intensive universities in the UK. 


  • The Russell Group estimates that English universities supplemented the cost of undergraduate education by an average of £2,500 per student per year in 2022/23. Without a change in government policy and with fees capped at £9,250 per year, we conservatively project this to increase to £5,000 per student per year by 2029/30.
  • Funding pressures in the devolved nations mirror and often exceed those in England; in Northern Ireland higher education funding has steadily decreased, in Wales the undergraduate tuition fee is capped at £9,000 resulting in shortfalls in fee income for the Welsh sector compared to England, and in Scotland government funding per Scottish student has also fallen in real terms.
  • The Department for Education recently granted a £2m uplift to the strategic priorities grant for 2024-25, representing a 0.14% increase on last year. Using February’s rate of CPI, this represents a real-terms cut of £53m (source: Wonkhe, 4 April 2024).
  • Universities are spending tens of millions of pounds on additional support for students to meet cost-of-living challenges as maintenance loans have failed to keep up with inflation since 2021/22. Students in England on the maximum maintenance loan next year will be almost £2,000 worse off than if loans had kept up with inflation since 2021/22. For more details, see the Russell Group Cost of Living Support briefing 


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