Russell Group backs higher fees as £3,000 loss per student revealed

It costs £3,000 more on average to educate a UK undergraduate than universities receive, according to a government-commissioned study.

As the Russell Group’s new chief executive, Libby Hackett, urged ministers to allow some universities to charge higher tuition fees depending on the course, analysis released by the Department for Education (DfE) shows that it cost £12,317 on average to deliver a degree in 2023-24 – far in excess of the maximum tuition fee of £9,250 that year.

The study, compiled by KPMG, found that it cost almost £20,000 a year to deliver a medical or dentistry degree, £16,466 a year to provide a physics degree and £14,083 a year to lay on an engineering degree.

Even the cheapest degree programmes to deliver had costs above the tuition fee level at the time. These include law courses (£9,475 a year to teach in 2023-24) and social science degrees (£10,340 a year).

Maths degrees cost an average of £12,891 to provide, says the report, which explained that this subject was “commonly thought of as a lower-cost subject to deliver” but actually had “higher underlying costs” because it was taught predominantly in “large and research-intensive universities”.

The DfE published the study on 18 September, shortly after Hackett told The Times that the current “monolithic” system in which fees for all courses are capped at the same rate was “not fit for purpose”. This academic year, the maximum tuition fee is £9,790, having been capped for many years at £9,250.

“Is it fair that we ask students or graduates to contribute the same amount for every course, every programme, at every university?” Hackett asked in The Times, adding: “It does not cover the average cost of an undergraduate domestic student. It’s not a fit-for-purpose system.”

The scale of the deficit incurred by universities on almost all courses is laid out starkly in the KPMG report, with course shortfalls significantly worse than when a similar review was undertaken in 2016-17.

While universities had “managed staff costs below inflation”, non-pay costs had risen by 46 per cent over the seven-year period, while centrally allocated indirect costs were up by 29 per cent and estate costs are 40 per cent higher.

According to the 205-page document, which drew on official data from 29 universities, “student-facing” costs accounted for 64 per cent of expenditure, with delivery costs standing at 25 per cent of expenditure. “Non-student-facing costs” made up 38 per cent of expenditure, of which about half was spent on “corporate services” including finance, HR and IT.

In a statement, Universities UK said the report’s findings “reinforce the need for a sustainable funding system that enables universities to continue delivering high-quality education, world-leading research and innovation, and support for students across the UK”.

The government should “legislate so that fees keep pace with inflation and pause the introduction of the international student levy, which further harms university finances, while it considers alternatives”, it added.

jack.grove@timeshighereducation.com