The Government has raised tuition fees without knowing whether the policy could backfire on universities in financial crisis, The i Paper can reveal.
The Department for Education (DfE) has commissioned research to establish how university students may respond to changes that affect their fees, and how it could affect student numbers.
However, the results will not be ready until spring next year – just months before the September 2026 tuition fee rise is due to take effect.
Higher education sources said it suggests the DfE lacks a clear understanding of how raising tuition fees for domestic students and taxing international fees could affect the sector, and whether it could potentially deter students and deepen universities’ financial crisis.
The DfE said “all policies are informed by pre-existing evidence, including this one” and the impact assessment will be published “in the usual way in due course”.
Previous DfE research published in 2018 found that raising fees to £10,000 a year would have a minimal 1 per cent negative impact on applications – but raising fees to £11,000 would cause an 8 per cent drop in applications.
The research, based on a large-scale survey of 2015 applicants, found that if £10,000 fees were accompanied by replacing maintenance grants with loans, applications would fall by 10-12 per cent.
Universities are already in a fragile financial situation, with modelling by the higher education regulator, the Office for Students (OfS), suggesting that nearly three-quarters of providers could be in deficit by 2025/26.
Risk assessment not completed, document reveals
Education Secretary Bridget Phillipson has confirmed that undergraduate tuition fees for domestic students in England will rise with inflation from 2026, taking fees to nearly £10,000.
It is understood that the DfE put out to tender its risk assessment on policy changes to a select number of companies in the last month, but it will not be completed until spring 2026 – just months before the inflationary tuition fee rise takes effect in September.
The tender document, seen by The i Paper, aims to find out how price-sensitive domestic and international students are to changes.
The impact analysis is due to be completed in spring 2026 – a year after the 6 per cent international student tax was proposed in the Home Office’s immigration white paper.
The purpose of the research is to understand the “price elasticity” of home and international students when it comes to demand for higher education in England, the document states.
The DfE said it intends to use the findings to “better understand how students may respond to changes in tuition fees [and] the student finance system”, how this will affect student demand for higher education and the wider effect of that on universities.
It added that evidence on how overseas students react to price changes is “essential” to fully understanding the impact of the international student levy, which will be reinvested into maintenance grants.
Taxing international student fees by 6 per cent could cost universities in England more than £600m a year, particularly hitting leading institutions such as University College London and the University of Manchester that take large numbers of international students, according to research by the Higher Education Policy Institute (HEPI).
International student fees heavily subsidise the cost of educating domestic students, who pay thousands of pounds less to attend university.
New maintenance grants will also be given to low-income students, which are also funded via the 6 per cent international student tax, with further details set to be unveiled at next month’s Budget.
Universities ‘uncertain’ about impact
A source at an organisation that has seen the tender document said the Government’s plans to link maintenance grants to the tax on international student fees raise “more questions than answers”.
“Given the fact that it’s such a significant policy and will have a major impact on higher education institutions, it would seem prudent to have actually undertaken the proposed analysis well in advance, because it is going to have a very different effect on different types of institutions,” they said.
Nick Hillman, founder of the HEPI, said it was “irresponsible” to make significant policy changes before carrying out a risk assessment.
He warned that taxing international student fees could add “additional pressure” to universities and “backfire in the sense of having a much more negative impact on universities than was expected”.
Universities UK – which represents 142 universities – found that within two years, the tuition fee uplift would bring in just over £400m, whereas the proposed international student levy would leave universities paying out around £700m.
“It’s good to see the Government considering price sensitivity, because we think they have underestimated this, but it’s essential that they conduct this research before they implement the levy,” a spokesperson for the group said.
A DfE spokesperson said: “All policies are informed by pre-existing evidence, including this one, and we will publish an impact assessment in the usual way in due course.
“The international student levy will fund the reintroduction of targeted maintenance grants to break down the barriers to opportunity for disadvantaged students.
“These form part of our plans to open up access to universities, restoring them as engines of aspiration, opportunity and growth. We will set out further details in the autumn budget.”
