A Crisis Is Brewing at U.K. Universities

From The Wall Street Journal:

CAMBRIDGE, England—The U.K.’s storied universities have a problem. They lose money on almost every British student they teach.

The country’s university system boasts 11 of the world’s top 100 universities, with three in the top 10—in a country that has just 1% of the global population. The system’s health has an outsize impact on both the future of the world’s sixth-biggest economy and globally important research.

That system is increasingly at risk from politics. Unlike in the U.S., where private universities and many state schools set their own tuition, in England and Wales the government sets a price cap on tuition for all domestic undergraduate students—the same cap for every college from Cambridge to Coventry. Since 2010, the price cap has remained essentially frozen, even as inflation sharply raises costs. Northern Ireland cuts tuition in half for domestic students. In Scotland, there is no tuition at all.

The upshot: While U.S. universities charge ever higher tuition in an arms race for the best facilities and research, leading to a soaring student debt crisis, U.K. universities have the opposite problem. They aren’t able to charge enough.

To bridge the gap, they are cutting back on everything from research to teacher salaries to dorm rooms, and teaching more classes online. They are increasingly relying on foreign students, who are charged market rates. And they are cutting back on local students: The percentage of British teens going to college is now falling for the first time in generations.

“It’s a turning point,” said Simon Marginson, a professor of higher education at the University of Oxford. Even the U.K.’s most elite universities could see finances and quality decline if the government doesn’t step in, he said. A new report this month by the House of Lords said the university funding system in the U.K. wasn’t sustainable and faced a looming crisis.

About 30 universities reported financial losses in the latest academic year, a number likely to triple this year to about one in four overall, according to the government regulator, which nevertheless said the overall system remained sound. Teacher strikes for higher pay affected about 83 universities last year.

Rankings for U.K. universities, while still the second best in the world after the U.S., fell in nine of the 13 metrics measured by Times Higher Education, including for the global reputation of their research and teaching. The U.K. data firm will release its latest university rankings on Wednesday. 

‘Not in a million years’

The vast majority of universities in the U.K. are public, financed out of the annual government budget. That means politicians and bureaucrats, and not the universities themselves, decide tuition. Since 1998, when U.K. universities started charging tuition, the government has raised the tuition level three times, drawing howls of protest from students.  

There is no relief for university budgets coming soon. Raising tuition at a time when average salaries in the U.K. have fallen the past two years because of high inflation is “just not going to happen, not in a million years,” Robert Halfon, the higher-education minister for the conservative government of Prime Minister Rishi Sunak, said in an interview with Times Higher Education. The opposition Labour Party, heavily favored to win elections next year, usually talks about cutting fees rather than raising them.

Halfon declined to be interviewed for this article. A spokesperson for the department said: “We are keeping maximum tuition fees frozen to deliver better value for students and for taxpayers and keep the cost of higher education under control,” adding that the sector is financially stable overall.  

“Ultimately, it means we will not be able to deliver such a high-quality education,” said David Maguire, the vice chancellor of East Anglia University, which has a creative writing course whose graduates include Nobel Prize winner Kazuo Ishiguro and novelist Ian McEwan. “So we won’t be able to attract the brightest and the best to our universities, who will then feed through into the U.K. economy, which is really built on services and knowledge.” 

U.K. universities have helped produce breakthroughs such as the theories of evolution and gravity, the discovery of penicillin, the structure of DNA and, more recently, the AstraZeneca COVID vaccine. British universities are currently researching cancer cures, artificial intelligence and next generation batteries for electric vehicles, among other vital issues. More than a quarter of today’s world leaders were educated at a U.K. university, second only to the U.S., according to the Higher Education Policy Institute, a U.K. think tank on education. 

Since 2012, annual tuition for domestic students in England has been raised only once, in 2017, from £9,000 a year to £9,250, or from about $11,200 to $11,500, an increase of 2.8%. Adjusting for inflation, fees have actually declined by about a third since 2012, according to DataHE, a higher-education consulting firm. Had tuition kept up with inflation, it would be close to £14,000, it estimates. 

Over the same period, U.S. tuition at private, nonprofit universities rose by 40% in nominal terms and nearly 10% after inflation to an average $34,041. Public universities raised annual tuition for in-state students by 34% before inflation and 5.4% after inflation to an average $9,596, according to data from the U.S. Department of Education. 

Britain’s Russell Group universities, the rough equivalent of the Ivy League, ran a deficit close to £2,500 per U.K. student for the 2022-23 school year, a shortfall that will double to £5,000 per student by 2030, according to data released by the group, which comprises Britain’s 24 most research-intensive universities. 

“The one jaw-dropping thing I’ve learned in my first three months is just how perilous the higher-education sector is financially,” Oxford University’s new vice chancellor, neuroscientist Irene Tracy, told a higher-education seminar in March. “We really have a worrying financial future.” 

Link to the rest at The Wall Street Journal

PG has attended a couple of two-week continuing legal education programs at one of the Oxford colleges. Also, in family history records, PG has found several ancestors who were educated to prepare them for the ministry at Oxford in the Sixteenth and Seventeenth Centuries. Some ancestors emigrated to the United States to avoid religious persecution in Britain.

Although his personal exposure has been relatively brief, PG developed a significant appreciation of Oxford. For him, the idea that learning has been going on in that place for over 900 years makes it an almost magical setting.

As the OP describes, Oxford and similar non-public institutions are subsidized directly by the British government. In the US, virtually all colleges and universities are subsidized directly or indirectly by the federal government, in large part by government-insured student loans. Public colleges and universities are subsidized directly by the state governments of the states where they exist and, secondly, by federally insured student loans.

Each approach to subsidizing college/university educational institutions has its downside.

As the OP describes, in Britain, direct subsidies are a recurring political issue. Why should those in the working class who did not attend university contribute to the rising subsidies for those who often are and will be more educationally and financially privileged? For members of Parliament representing primarily working-class constituents, this must be an evergreen political issue.

In the US, in past years, the number of staff members performing administrative functions, sometimes to satisfy state or federal government mandates, has grown much more rapidly than the number of professors. The salaries of more than a few of the administrative staff are higher than those paid to professors and instructors who are actually teaching students. In recent years, bloated staff roles have been a major driver of increased student costs.

In the US, the college cost squeeze often appears in the occupational choices made by graduates with large student loan debts.

A would-be public school teacher may not be able to afford this career path because it won’t provide a living wage, after student loan obligations are met.

In some locales, government programs may subsidize student loan repayments for public employees such as public school teachers. However, this approach carries some of the same inequities when those who didn’t receive a college education are indirectly subsidizing those who did.

Needless to say, PG doesn’t have a good solution for this growing problem.

7 thoughts on “A Crisis Is Brewing at U.K. Universities”

  1. Not that long ago, somebody would become, say, a hotel manager by working his way up the ranks, but now he has to get a magic piece of paper in hotel management or supply chain and operations management to do the very same job. Some companies even used to use standardized examinations to help figure out which high school graduates might be cut out to work at the local power company or what have you, but of course in our more enlightened age it is far more egalitarian to force a young man to amass huge amounts of debt than simply to spend an afternoon administering him a test.

    The easiest and fastest way to bring down the cost of higher education is to reduce demand by no longer forcing people to get expensive degrees that they do not need. Most Americans attend college not because they want to but because in our credentialist age it is considered a ticket to middle class life.

    • The tests companies used to give had to be eliminated because blacks did not score as high as whites. So, the companies just shifted gears and let universities vet people

      • Yes, Griggs vs. Duke Power Company, if memory serves (which just might be why I used a power company as my hypothetical test-giver).

        In any case, nothing says egalitarianism like burdening some people with so much debt that they can’t afford to have kids until they’re pushing forty, all because other people don’t score well on standardized tests.

        I can’t imagine anything bad coming from that, like, say, a society-wide competency collapse that results in the demise–maybe spread out over several generations, maybe just in the half-hour it would take us to blunder into some damned fool nuclear war with Russia–of the entirety of Western Civilization.

  2. Just hang in there for a few more decades: the population will be crashing, the current systems will all come back into balance, and there will be enough room at Oxford for those who want to matriculate. No need to build more.

    • By the time the system comes back into balance, domesticated animals will be grazing in Harvard Yard. From sheepskin to sheep, you might say.

    • The UK population pyramid is pretty stable and the country is still positive on immigration.


      If you look at their periods of lower fertility, they line up with the late ’70’s, mid 2000’s, and the Brexit disruption and covid lockdowns. As long as they sort out their post globalization economy over the next few years (and their deeds over tech companies start to match their talk about welcoming tech companies) they should avoid an Italy style demographic collapse. And an east asian one isn’t in the cards even then.

      Their future looks more like scandinavia: no big growth, no significant drop.

  3. The UK population pyramid is pretty stable and the country is still positive on immigration.

    Immigration is obviously good for Britain. Great thinkers like Peter Zeihan say so in their talks to Fortune 500 companies. And everybody over there says so too, because anybody who says it isn’t gets arrested.

    And besides, immigration is far preferable to creating conditions that would encourage the British to have more children of their own. We don’t want anything like that to distract the British (or Americans, or French, or Germans, etc.) from matters of far greater import, such as being dutiful consumers and maximizing their economic utility.

    Only a retrograde country like Hungary thinks it should be populated by, well, Hungarians. That’s why we’re imposing sanctions on them.

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