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

Chief executive Libby Hackett says top universities should charge more as scale of teaching deficit is revealed

Published on
September 18, 2026
Last updated
September 18, 2026
Jack Grove
Source: Russell Group

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).

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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.

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“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.

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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

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Reader's comments (16)

#1 Submitted by ... on September 18, 2026 - 5:47pm
If Libby Hackett's group's members were losing so much money teaching undergraduates, they wouldn't have spent the years since the end of number controls hoovering them all up from low and middle tarriff institutions, or paying through the nose to house and bus in those students once their accommodation was depleted. That the Russell Cartel have made maths expensive to deliver through engineering its demise elsewhere is nothing to be proud of on any side of the funding queue.
#2 Submitted by bursar@... on September 19, 2026 - 8:51am
YES! Well put - gobble up other Us’ customers and provide a worsened SSR and don’t care about their accommodation needs!… and loose even more money!! Call that a ‘strategy’?
#3 Submitted by ... on September 19, 2026 - 8:44am
Yes it does seem odd. If one ran a restaurant, for example, and lost money on every customer served, it would only increase the loss if you served more customers and the business would fold. This is creative accountancy constructed for polemical purposes. It's similar to the claim that because FEC is not 100%, Universities actually make a loss on each award? How are the labour costs of senior management in RG Universities factoired into these costings for example. These enormous costs are direct lablour costs paid to people who do no teaching. Could not these costs be reduced or removed from the costs of overheads that would reduce the overall loss per student if it's really a genuine costing, which I doubt.
#4 Submitted by ... on September 21, 2026 - 8:27am
Exactly, if you ask me they should get Gordon Ramsay in to sort this out!! Now that would be great TV. Gordon Ramsay's University Nightmares!
#5 Submitted by graham@... on September 21, 2026 - 12:53pm
No it wouldn't, because all organisations have fixed and variable costs. The variable costs, or marginal cost, is lower than the fee cap, so while each student on average still generates a deficit, the deficit per student reduces as recruitment increases. If you operated a restaurant, the cost of your premises would be fixed whether you served 1 customer per day or 100. While it may not be without criticism, it most certainly is a genuine costing.
#6 Submitted by ... on September 22, 2026 - 9:26am
You are right of course and the analogy was a little facetious. But of course it's not the accounting cost here that is really the key factor, but the size of the defecit or surplus. Some Universities hoover up students to produce a surplus of course. Those with a surplus are claiming that their surplus should be much larger and funded by student and taxpayer. And of course defecits can be easily created by inflating costs, as is commonly done in the private sector for tax purposes.
#7 Submitted by ... on September 19, 2026 - 8:51am
What about the costs incurred in the notoriously excessive use of various Consultancies in the sector, etc. Are these unecessary indirect costs which have riseen 29% not passed on fee-paying students? Some costs have risen of course but many are inflated by Us themselves and do not reflect realistiv valuations. This figure of £3k per student is an absolute joke.
#8 Submitted by ... on September 21, 2026 - 8:26am
Yes reduce those direct and indirect costs that are within your control, such as high managerial salaries and assess the numbers of highly paid non-teaching and research staff (what some refer to as "bloat"), to see if costs may not be reduced there as well. Assess the workload arrangements as well to make sure these are appropriate. Generic direct costs might further be reduced in some cases by sharing facilities such as HR and payroll across institutions, via merger or other arrangements. Don't just say these costs are rising inexorably at massive rates without examining why they are rising and what savings could reasonably be made.
#9 Submitted by m.o.... on September 22, 2026 - 9:25am
A good point about workload arrangements. Check to see if all staff are actually pulling their weight in teaching, as this is where the bloat is. If a workload audit were done across universities the findings would shock many.
#10 Submitted by andrew.... on September 21, 2026 - 5:30pm
The degree costs so much to deliver because it "actually had “higher underlying costs” because it was taught predominantly in “large and research-intensive universities”." I think this gives the game away.
#11 Submitted by ... on September 22, 2026 - 9:19am
And of course if RG Universities got an extra £3k per student, how much of that £3k would be spent on the students' education itself and how much would go to funding increased, arguably exorbitant, pay rises (fixed costs) for senior admin and numerous "white elephant" projects, which, as we know. happened when the £9k maximum student fees were introduced via the student loan system? It's not a very convincing argument to put before government and the public given this rather notorious history in my opinion, especially in the current fiscal climate of high taxation and spiralling expenditure. We all remember Dame Glynis Breakwell, vice chancellor of Bath University, who was forced to step down following an outcry over her £468,000 ten years ago and expenses "biscuits don't grow on trees". I suppose manangement expenses are also factored into the overall cost of student degrees and this £3k funding gap per student?
#12 Submitted by richard... on September 26, 2026 - 1:08pm
Yes, the use of TRAC is designed to hide all this - projects that involve 'student experience' that waste millions on failed implementations and expensive consultants look like 'contributions to student enhancement' when they are nothing of the sort.
#13 Submitted by ... on September 22, 2026 - 11:51am
Certainly Variable Indirect Costs are rising as I the cost of First Class Airfares and 5 star hotels are rising and are cliamed in expenses as we know
#14 Submitted by pmsxl5@... on September 22, 2026 - 2:21pm
Yes this whole thing does not make sense to me. Obviously, Us can not do anything about fixed costs such as as premises, energy, NI and the like. But they can reduce the amounts they spend on staff not paid on the pay spine, such as VCs PVCs etc. They can reduce the amounts they spend on consultancies and on staff expenses (the international travel and 5 star accommodation for instance), which are a part of their costs. They can also be more circumspect about some of their decisions with reference to new buildings etc and the costs of gow they have raised the funds to undertake such work. The assumption here is that all their costings are on the margins of what is essential.
#15 Submitted by ... on September 23, 2026 - 7:21am
Also, the extraordinary cost of REF2027 ongoing and (estimated c. £700 million) and all the various buy outs and research admin associated directly with it. Presumably these are ultimately met from income derived from student fees though not directly related to their teaching? The problem with the sector is that thre are too many drones and not enough worker/teaching bees in the hive and soneone has to pay for those rising costs?
#16 Submitted by o.... on September 25, 2026 - 10:13pm
Staff related costs have been managed below inflation, and main increase appears due to cost-of-living kind of increases. Whatever people may want to say about bloat, fact is that the expectation for universities to deliver below inflation is a highly unsustainable model. Many UK RG academics also are research active and contribute hugely to economic prosperity. Also noteworthy that indirect costs on grants have risen to above 60% which is a lot higher than the non-teaching component on student fees.

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