Russell Group universities are becoming increasingly reliant on student payments to operate rather than public spending. While government funds have also increased during the past decade, their share has shrunk and has been overtaken by tuition fees. In the year 2020-2021, 13 of the 24 universities that make up Britain’s top-flight school association received more than half of their income from tuition fees.

This is a trend that the sector as a whole has seen grow since 2010, when student payments surpassed government funds for the first time, the Higher Education Statistics Agency (HESA) said in an email. This was two years before the policy change that tripled tuition fees for domestic students from £3,000 to £9,000. Since then, the economic weight of fees only continued to swell, to the point of accounting for more than half of universities’ income in 2016-17.

The question of who should foot the bill for higher education is still controversial. Should attending university be a mostly self-funded career choice or should taxpayers invest more in training professionals? Several studies show that tertiary education is a major driver of economic competitiveness, and the UK is in need of highly qualified labour. Last year, British employers had to recruit almost a quarter of a million professionals from overseas and sponsor them using the skilled worker visa scheme — a 33% jump from 2019.

Many argue that the government has continued to chip in through student finance programmes, as a HESA spokesperson says: “Nowadays, most universities’ money comes from tuition fees but those tuition fees come often from students who then take a loan from the government to pay for them.” Only in England , around 1.5 million students borrow a total of almost £20 billion every year, according to the latest figures published by the Parliament.

“Because the student loans are government-backed and written off after 30 years, students aren’t really shouldering as much of the cost as it may look,” says Alexis Brown, director of policy and advocacy at the Higher Education Policy Institute (HEPI), a think tank focused on education. “The taxpayer pays for it so it’s not as quite clear cut as it would be if we were in America, where the student actually does pay it all back.”

Only one in four students who started full-time undergraduate degrees in 2020-21 is expected to repay their debt in full, according to forecasts by the Department of Education. This has resulted in the debate about higher education finance focusing more on the design of student loans rather than the affordability of tuition fees.

Brown says student loans make it possible for everyone in the UK to go to university, but the idea of having a growing debt of thousands of pounds for 30 years can be a deterrent for poorer families, as a study published in 2017 by the UCL Institute of Education found.

However, beyond UK borders, there are thousands of students ready to take loans they will have to pay in full and with interests to attend a British university.

International Students: The Willing Cash Cow

The number of non-EU students paying international tuition fees at Russell Group universities rose sharply in the four years to 2021, with 16 of the 24 universities experiencing an increase of more than 20%. The University of Glasgow, for instance, saw its number of non-EU international students double, while Queen's University Belfast, registered an 80% increase.

Foreign students trust the investment will pay off. “I think it was worth the money, says Yijing Sun, a Chinese financial economics student at Cardiff University.

But for her, and several other students, the value isn’t in what they learn. “I didn't intend to learn anything, after all, you don't learn much in a year. I believe the main thing is to get some experience.”

Most of the universities –21 out of 24– saw these international students occupy a greater portion of the overall student body, as their ratio of non-EU international to total student numbers rose. For example, in the University College London and the University of Glasgow, the ratio rose by almost 0.1. This means that in every group of 10 students, there was one more paying international tuition fees than before. Queen's University Belfast and Glasgow University were the ones with the highest growth in their ratios, with a 70% and a 55% increase.

While the total number of students has kept growing, tuition fees for domestic students have been frozen since 2017, leaving universities with little leeway for adapting their budget to larger classrooms. At the same time, income from international student fees has become "a key area of university activity which generates a surplus", according to the Russell Group’s Spending Review 2021.

This claim is supported by the independent regulator, the Office for Students (OfS). Its figures show that while universities across the UK had huge deficits in public-funded teaching and research that year, "Non-publicly funded teaching (primarily overseas students) continued to generate a significant surplus" of more than £2 billion.

The Development of the OfS's Approach to Funding published in September 2020 also states that home-fee students are causing deficits in five price categories of courses. The most expensive of these costs £12,000 a year. Are international students, who pay more than £20,000 a year, ultimately subsidising UK students who pay roughly £9,000? According to Michael Spence, president and provost of University College London, that would be the case, as he told The Guardian in September: “There is no course at UCL where the undergraduate fee covers the cost of providing the course… We’re already supporting the education of British undergraduates with both international student and postgraduate student fees.”

The growth of international students is only possible if students are willing to come. The largest sources of international students in 2020-2021 were China, the European Union and India. The number of students from China has increased by almost half and there are five times as many students from India as in 2016-17.

These students come of course for the quality of the education, the lower cost (compared to North America) and the relatively short duration. But many of them say they also come because courses are easier than in China and India.

With massive populations, quality education resources in these two countries are scarce. Entrance exams in India and China keep getting tougher to crack for students. The number of places remains the same, while the number of applicants increases with every passing year.

As Mengyang Li, a Chinese MA in History student at the University of Exeter said: “As long as you pass the application, you don't have to take exams under pressure like in China.” Yijing Sun said: “I was too lazy to work on the exams to go to graduate school in China.”

Both Chinese students interviewed used agencies for the application process and said they paid about £1,200 for their services. However, many agencies don’t charge students and make their profits from commissions from UK universities. "It's usually 15-25% of the tuition fee," said an owner of one of these agencies, based in Beijing. This statement coincides with what HEPI analysts wrote in an article published in 2020: “Agents are paid commission, on average 15% of the tuition fee charged to each successfully enrolled student.”

The University of Oxford, Cambridge and Imperial College said they didn’t use student agencies for recruitment in 2020-21, and the London School of Economics said it had recruited only 14 students through this channel. Other Russell Group universities refused to disclose what agencies they work with and how much they pay, except for the University of York, which said it spent close to £9 million that year.

A non-profit surplus?

Universities are non-profit organisations with charitable status, and are exempt from paying certain taxes. Their operating surplus is defined as income minus expenditure and is essentially profit under a different name, which in the past has been contentious. HESA data shows that in 2020 they amassed an operating surplus of £2.5 million and in 2021 just over £1 million.

During the pandemic, there was no Russell group-wide refunding of tuition fees, alleviation of accommodation costs or bursaries given to students despite an industry-wide reduction in face-to-face teaching. In response to criticism in the press, a Russell Group spokesperson said universities had “worked hard to prioritise students and provide the best possible experience during the pandemic-including by investing significantly in digital learning and increasing wider support services”, The Telegraph published.

During the pandemic, however, staff costs fell. Total expenditure was reduced for 2020-21, likely contributing to the operating surplus.

This was an academic year that left many students unhappy. A 2021 student survey by HEPI found that “44% of students report ‘poor or very poor’ value – a significant leap from the 29% of students with that perception in 2019”.

Some experts have argued students should not be expected to pay £9,000 for online lessons. Experts have stated a continuation of online learning post-pandemic would erode public support for tuition fees at their current level.

However, chances of demand falling aren’t very high. For Andrew Norton, a professor in the Practice of Higher Education Policy at the Australian National University, “demand for higher education is really not as sensitive to the economic incentives, as you might expect”. Often He says that short-term reductions in demand for higher education do occur but that the demand for higher education tends to resume what he calls “this very long term trend towards greater participation in our education”.

While not reimbursing fees may sour university approval ratings and student uptake in the short term, Andrew Norton says “you never see any kind of long term reversal”, in higher education participation as society is at a “key cultural transmission point where the parents will expect the kids to go to university.”

So what are universities doing with all this surplus? “They’ll invest it in a new venture or in any kind of specific portfolios that they have… It’s not like they’re paying dividends to shareholders”, says HEPI’s Alexis Brown. “I don’t think that just because they’re non-profit they’re obligated to invest their funds in any specific way… I don’t know anyone who would invest that into creating lower tuition fees because they have no incentive to do so,” she says.

“If students would pay a higher fee, why would they reduce it and lose money?”

International Students

What made them choose the UK as their study destination? Is the education provided worth the money and did they apply to the courses through recruitment agencies?

Yijing Sun

Chinese, Cardiff University, MSc Financial Economics, age: 23

Q: What made you choose to study in the U.K. rather than your home country? Why did you choose the UK out of many other countries for education?

A: What can I say? The reason was very realistic. I was too lazy to work on the exams to go to graduate school in China. I lost the enthusiasm for studying after undergraduate study. Relatively speaking, coming to the UK is good value for money. Especially for girls, there is an age problem. Also, I like to watch English dramas. Hahaha. And at the time, Australia won’t let me in.

Q: What about Hong Kong and New Zealand, did you not consider these options?

A: Singapore was so competitive. And I didn't consider Asia as I needed to go far away from home when studying abroad.

Q: Did you apply for university by yourself or through an agent? How much did you pay?

A: Agent. I think it was less than 20,000 RMB (2,431 GBP). I paid my first agent 12,000 RMB. The second one was over 8,000 RMB. I went to two because the first one was a piece of trash. The first agent kept brainwashing me, saying that my grades weren't good enough, so I couldn't apply to good schools. I almost got brainwashed. They applied to a school which doesn't even accept my university’s degree and made me submit the application and pay the fee.

Agencies usually make five applications to UK universities for you. They get the money if you get into any of them. And they don’t even consider if they are applicable. They just apply what you said. It's very frustrating.

Q: Do you think it was worth the money?

A: In hindsight, I think what the agent was doing was making money from the information gap, so for me at that time, I thought it was worth it. OK, I think it is also worth it now, because after all, I don't know a lot of information and I was afraid I would make a mistake and miss out on a good school offer.

Q: So where did you get your tuition fees from?

A: From my family.

Q: How is your experience here? Is it different from what you thought it would be? Do you think it is worth the money?

A: I think my experience here has been okay. I don't think there was any difference. I think it was worth the money. Because when I first came here, I didn't intend to learn anything, after all, you don't learn much in a year. I believe the main thing is to get some experience.

All they’ve been teaching now is theoretical stuff, and they don't even talk about why we are talking about the theories. And everything you learn now is just for exams. I feel like it's the same as in China. It's just quite “watery (水, with low difficulty, low value)” anyway. I never met the teacher offline for the three courses we had in the business school last semester. Most of the students who came to the business school didn't speak English very well, they weren't native speakers, and the teachers had accents, and the classes were just videos recorded a few years ago. If you are not too diligent, you won't watch it.

The question and answer session is also the same, one person only has one hour, and there are so many people in a class. There is not enough time and no one asks questions either, so it's pretty “watery” anyway.

Q: Actually, tuition fees are the most important part of Russell Group universities' income apart from Oxbridge, and international students' tuition fees are the biggest part of it. It is calculated that only international students who pay high tuition fees generate income for the university, while every student who pays domestic tuition fees loses money. Do you think it's reasonable to pay so much more money?

A: I think it's unreasonable. They may think that for people from other countries to come and enjoy quality education in my country, you have to pay so much. But I now feel that this “quality education” is in inverted commas. And the only impact the Russell Group has had on me so far is that when doing my thesis the tutor I chose was shared with the Russell Group, but it didn't make much difference because it was all online anyway and I couldn't communicate with the tutor offline. Some programs have a very good allocation of resources. They have one teacher for two students. But for us, it's one teacher for a few hundred students. I think it's quite unfair.

Jaya Jha

Indian, Cardiff University, MA International Journalism, age: 29

Q: What made you choose to study in the U.K. rather than your home country?

A: I wanted to pursue English journalism and since India was going through a major lockdown so there were few chances of colleges reopening. So, I had to apply outside of my country.

Q: Did you do your own research for the universities to apply or was it through an education counsellor?

A: I did my own research.

Q: How do you finance your tuition fees? Are you working part-time, does it affect your study?

A: I am financing my education on my own and working in two part time jobs. No it doesn't affect my education.

Q: Where do you think universities get most of their income from?

A: International students.

Q: Do you think the money you spend for education is worth it or not? Why?

A: I am yet to get a job. Once I do..it will all be worth it.

Q: Tuition fees are the major drivers of income for universities and international students account for most of this income. And international students generate surplus while domestic students are running at a deficit. How do you feel about the fact that you would end up paying for domestic students’ education?

A: It happens everywhere. Back in India when I was pursuing my education in Bangalore, I used to pay triple the amount paid by any kannadiga. Obviously I do not feel good, since I believe in equality, but then that's how the government everywhere functions.

Mengyang Li

Chinese, University of Exeter, MA History, age: 29

Q: Why did you choose to study in the UK in the first place? On the one hand, why didn't you choose to be educated in China, and on the other hand, why did you choose the UK out of many countries?

A: The UK‘s master’s degrees are only one year long and relatively affordable. The environment is also good and I have friends here. That's why I chose the UK. The process is also simple, as long as you pass the application, you don't have to take exams under pressure like in China.

Q:How did you find the programme you wanted to apply for, did you do it DIY or did you go to an agent?

A:An agent. My needs were very clear, UK, History. And I told them I only care about the ranking of my subject, not the University. The agent gave me a list very quickly and I picked the ones I liked according to the list. I had already checked the information before I mentioned my needs to them. Basically, I was sure that I wanted to come to Exeter.

Q: Did you pay the agent?

A:I was clear about my needs, but the agent did the rest of the process. I had to pay.

Q:How much did you pay?

A:12k RMB.

Q:So do you think it was worth the money now? And did you know that some of the agents you work with take a percentage of your tuition fees from the university?

A:It's worth it. I didn't know about that. I don't care either.

Q: And how did you get all the money to come over here?

A: I saved it all up from my own work.

Q: And in your perception, what is the main source of income for these Russell Group universities in the UK? Is it tuition fees or government funding, for example?

A: I don't know. I don't care.

Q: And do you think the tuition fees are reasonable? Given your experience now, do you think it's money well spent?

A: The school keeps rising in various rankings anyway, proving to be alive and well and not something I need to worry about. I haven't compared it to know if it is reasonable or not. I think it was worth it. I chose this path at the time and have accepted all the prices I need to pay for it.

Q: How about being a little more specific? Do you feel that the quality of education you received was good? Was there a difference between what you expected and what you actually got?

A: Not much. At this age, I don't expect to be forced to study by teachers like I was in high school. The teachers give me guidance and advice, and I ask for help if I don't understand something, so I think that's enough.

Q:One last thing. Tuition fees are actually the largest part of Russell Group universities' income apart from Oxbridge, and international students' tuition fees are the largest part of it. And it's calculated that only international students who pay high tuition fees generate income for the university, while every student who pays domestic tuition fees loses money. Do you think it's reasonable to pay so much more money?

A: I just want to do what I want to do, so I don't care about that.

Syed Ali Jaffery

Pakistani, Cardiff University, MSc Data Science and Analytics, age:27

Q: What made you choose to study in the U.K. rather than your home country?

A: The education system and the advanced methods of research are better than my home country.

Q: Did you do your own research for the universities to apply or was it through an education counsellor?

A: I did my own research but I did go to a counsellor as well for options.

Q: Did you pay for an education counsellor or was the service provided for free? Was it helpful in making your final decision?

A: I didn’t pay any fee to the counsellor but he helped a lot in making the final decision.

Q: How do you finance your tuition fees? Are you working part-time, does it affect your study?

A: I am financing myself with the money I saved. I work part time and it definitely affects my study sometimes because it is very hard to maintain balance.

Q: Where do you think universities get most of their income from?

A: From international students for sure.

Q: Do you think the money you spend for education is worth it or not? Why?

A: I think it is worth it as it gives the student exposure and links that one couldn’t have in their home country. Plus, after graduation working in the UK could be an add-on to a strong resume. At the end of the day you learn a lot of modern and useful skills that are hardly ever used in your home country.

Q: Tuition fees are the major drivers of income for universities and international students account for most of this income. And international students generate surplus while domestic students are running at a deficit. How do you feel about the fact that you would end up paying for domestic students’ education?

A: Taking this as a positive thing then it would be good paying for someone to study who couldn’t afford much. But on the other hand, it is also a burden to the families who don’t have enough money to afford expensive fees of good universities where domestic only pay half of the fee which international students do. And for students like me who are financing themselves, I have worked hard to get here. Why do I have to pay for anyone who could do it for him/her-self

Todun Adekanye

Nigerian, Cardiff University, MSc Psychology, age:23

Q: What made you choose to study in the U.K. rather than your home country?

A: The UK offers a better opportunity to pursue in a psychology course

Q: Did you do your own research for the universities to apply or was it through an education counsellor?

A: I did my own research

Q: How do you finance your tuition fees? Are you working part-time, does it affect your study?

A: My parents sponsor me

Q: Where do you think universities get most of their income from?

A: I think they get it from student uni fees

Q: Do you think the money you spend for education is worth it or not? Why?

A: I think the money is worth it. But international fees are quite overly expensive.

Q: Tuition fees are the major drivers of income for universities and international students account for most of this income. And international students generate surplus while domestic students are running at a deficit. How do you feel about the fact that you would end up paying for domestic students’ education?

A: It definitely does not feel good.

University Representatives

In an interview with an owner of an University representative company based in Beijing, we found out really interesting insights on how much universities pay agencies to recruit students, an approximate number of students recruited from these agencies and the percentage of students that apply through these agencies, among other things.

Q: What do you do?

A: I am the owner of our company. We are an exclusive university representative and have over 30 employees. We are not a student agency. Another part of our business is the high-end study abroad application (applying for world-top universities), helping students with systematic CV packaging. The top 50 universities in the world don't really have a shortage of students, they don't use agencies.

Q:What is a university representative?

A:We are responsible for the admissions of a North American university in mainland China and they give us commissions. It’s usually 15-25% of the tuition fee. The worse the university the higher the commission, by the way. It's an open secret. But we also give a percentage of that money to the student agency. We are really more like a regional distributor for an international brand.

Q: So every agency gets money back when they recruit a student for the university?

A:No, the agency has to have a relationship with the university in order to get the money back, for example, if they bypass us as a distributor in China, they can't get the commission. But I'm not sure about the UK.

Q:But I can't see who is their representative and who is their agency in China from the public information of the university. The information is vague.

A:This information is generally only known to agents, not students. The agents are very wary of students bypassing them or going directly to the university representative. University representatives are very close to the university and know everything about the university. They can tell student agencies how likely a student is to get a place. University representatives are actually willing to hand over the job of communicating with students to agents. So that we can maintain the entire China intake with a few staff ourselves. Our relationship with the agencies is like that of a regional distributor and a wholesaler. At our best, we recruited over 200 students to the university in one year.

Q: Do you also do business in the UK?

A: Yes, the UK business is quite developed so we also take part. But we do more on the US side because the UK is a country with a clear hierarchy, where people are divided into classes. There are also classes of degrees, right? They like standard figures, there are fewer things we can do. Whereas with North American applications we have more scope to work with. They are much more demanding in terms of paperwork. Soft skills can play a big role.

Q:What can you do to help students?

A:For students who may or may not be accepted by universities, we are more useful. We have some influence on the school and we know what the school values. We can then allow students to make up for it in a targeted way. It's also good to know if a major is already full, to avoid wasting energy. But it's still difficult for an agent to recommend someone directly to a school. It doesn't usually happen. Unless it's an extremely close personal relationship.

Q: I've heard that schools will run programs specifically for Chinese students in order to make money. Is that true?

A: Of course. I know of a university where the vice-chancellor is Chinese. They offer programmes for Chinese students purely to make money. It's mainly focused on business, MBA. And even the curriculums are fixed, so you can't take classes that you could take in other normal programmes.

Q: Has the epidemic had an impact on your business?

A: Yes. We used to get around 1,000 applications a year, but now the number of applications has dropped significantly. The media has had a big impact on parents. The main thing now is that the country's bilateral relations are not good and there is a fear that children will be at risk if they go there. There have been a particularly high number of children going to high school in the US these past few years who have returned home to take the GaoKao (Chinese University entrance exams). Of course, the universities at the top may be fine, but the ones below them are having a hard time. I guess that will be the case for at least five years.

Q:What do you think is the value of representatives and agencies?

A:It's interesting to say. Chinese parents are more trusting of agents who take money. If you say you can apply for free and only take a commission from the university, they are not comfortable with that. And all agencies have their own admissions channels. This is something that universities and university representatives can't penetrate with advertising. For example, some agencies have private relationships with high schools in China, so they can go directly to the high schools to recruit students. And also, especially for high-end applications, the role of agents cannot be ignored. You need a lot of experience to be able to deal with that.

Q:What percentage of Chinese students who apply to study in the UK do so through an agent?

A:In my experience, the probability of Chinese students applying on their own for undergraduate studies in the UK is basically zero. For postgraduate students, most of them go to agents, 90%.

Data Source

Higher Education Statistics Agency (HESA, where our data come from) WePress & Communications Officer at Higher Education Statistics Agency (HESA, where our data come from) on rising tuition fees, data collection and pension schemes.

Simon Kemp

Press & Communications Officer at Higher Education Statistics Agency (HESA)

Q: But nowadays most universities' money comes from tuition fees, but those tuition fees often come from students who then take a loan from the government to pay the fees. Is this new or has it been like this for a while?

A: The tuition fees have been around for 25 years or more. But they've gradually increased. The cap on the tourist visa, the maximum fee that a university can charge has risen overtime, so that now the maximum fee is £9000 a year.

Q: I was wondering how so for what I understand before the funds that came from the government, they were more than the money that they got from tuition fees and now tuition fees have surpassed this one as an income, right?

A: That's right, yeah.

Q: And how do you know how long this has happened? Is it 25 years ago that tuition fees became more important for them?

A: Oh no, no. So, when I was a student in the 1990s, I paid £1000 per year. And so, since that point the majority of University funding came from grants from the government and so those fees have gone up. The amount of grant funding the university has gone down, so I think I can't remember exactly when tuition fees became the major source. We've been collecting data though so I can probably find that out for you and send it to you to find detailed final data and summary data on our website.

Q: How does the government decide which universities to give more money?

A: Our data shows for every university how much money they got and how much income they got from funding grants and how much from tuition fees. So, you can't compare the different universities that way and a lot of that funding will be from and the research grants as different universities do different levels of research, so some particular Russell Group universities which do a lot of their work in research, get a lot more money from research grants than other universities which concentrate mainly on teaching.

Q: OK, and if they receive money for research, they can only spend it on research, right?

A: That's right.

Q: While looking at the 2020 to 2021 data in their annual financial reports as our source, we couldn't find certain data like in your HESA datasets, the breakup of male and female enrollments and restructuring costs in overall expenditure data. I was wondering what's the source of the data which you’ve got from past years?

A: The data that we publish should match what is in the reports of universities. Until two years ago universities had to send us their financial data in a spreadsheet, so that's in the same format from every university so that we could then publish that data. Things are slightly different now. In England, universities send that information to the Office for Students instead of us and then the Office for Students sends it to us to publish.

Q: So, you mean that these universities will send you their data by themselves? It's not you collecting it from them, like you know from some other open source.

A: That's right, so the universities have to fill in a spreadsheet with details from their accounts to present to the Office of Students and the other funding bodies and until 2 years ago they did that through us. We collected that to provide the funding bodies now they send the data directly to the regulator in England. But they still send it to us and then we collect that and put that online. You'll notice that we have not published 2021 data for most universities yet what's published online for 2021.

There are the accounts of private universities who have a different financial year, so they do their accounts starting on a different date on any relevant date. Most older and public universities use the date Aug. 1 to July 31 for their financial year, that's their accounting year, and so those ones are published. So, the latest data we publish for most public universities is that of the 2019-20 academic year.

Q: I can see that in the key financial indicators page of the data set you provided shows that some higher education providers saw significant cost adjustments in both 2019 and 2020 relating to the accounting for the value of pension schemes, and this is a big part of the movement. What exactly does this movement mean and why is it such a huge part? And why has it driven the whole surplus and deficit up and down?

A: Universities as employers pay into a pension fund or their employees. So, when employees retire, they can withdraw a pension. Now the value of that fund causes most universities to use the same pension scheme. One is that it’s affected by the market by the stock market. What is expected to be the amount of money available to pay future pension depends on changes in the stock market.

So, when that changes the accountants then have to reconsider the future value of that pension scheme and when accountants and the actuaries calculate how much money they'll be able to pay out in the pension they will say whether the universities need to put more money into that to top it up, to make it enough to pay those future pensions.

Well, there's been a lot of changes in stock market prices in recent years, and the value of pension schemes became lower than would have been enough to pay out the pension. So, the universities have had to add more than they expected to that pension account to ensure that future pensions are paid. But they've just done this once and put it in their accounts over two years and it's not expected to be a repeated regular top up payment. But the different universities have accounted for that in different ways and across universities it has perturbed the normal trends in their income and expenditure and their surplus and deficit figures for those years because of that exceptional payment.

Researchers

What do people in the University's Centre for Social Research and Methods and think tank like the Higher Education Policy Institute (HEPI) say?

Alexis Brown

Director of policy and advocacy at think tank the Higher Education Policy Institute (HEPI)

Q: So, the first question is that we have seen that in the past five years universities rely more on payment from students in the form of tuition fees and these account for more than 50% of the funding. Not for all universities but for most. Is this how universities are supposed to work or is this a recent occurrence?

A: Yeah, I guess that's happened because of the introduction of higher tuition fees in 2012. As you probably know, tuition fees tripled that year, and so a lot of the money that had originally come from the government through grant funding then came kind of through government subsidized student loans to universities.

Q: When they made this reform, did they want most of the cost to be borne by students? I mean the funding also went down.

A: The tuition fee hasn't kept pace with inflation, so that has kind of eroded inflation as it eroded the unit resource Fair student funding over the last 10 years.

Because the student loans are government-backed and written off after 30 years, students aren’t really shouldering as much of the cost as it may look. The taxpayer pays for it so it’s not as quite clear cut as it would be if we were in America, where the student actually does pay it all back.

Q: Do student loans help students from lower income groups attend UK universities?

A: Student loans make it possible for everyone in the UK to go to university, but the idea of having a growing debt of thousands of pounds for 30 years can be a deterrent for poorer families.

Andrew Norton

Professor in the practice of higher education policy at the Australian National University's Centre for Social Research and Methods

Q: Our research findings from the Higher Education Statistics Agency demonstrate that university income has become more reliant on tuition fees in the UK than ever before. For example - In 2020-2021, 13 out of 24 Russell Group universities received more than 50% of their income from tuition fees. Do you have any insight on why this might be?

A: I think there are two reasons. One is about a decade ago England abolished subsidies for most undergraduate courses and switched to the 9 thousand pound model so that meant the fee income from English students went up significantly. Over this same time period, with the exception of a dip during covid, the number of international students in the UK has gone up and they typically pay much higher fees than the local students. And that has a big effect on the overall share of university revenue that is coming from tuition fees. So I think they're both domestic and international factors here.

Q: Is it a similar picture in Australia?

A: It's broadly similar. The big difference is that in Australia the tuition subsidies, even though they're now quite small in some fields, have never been abolished, and so they are still playing a larger role in the Australian system than the English system……. That's the main reason Australia has, I think, been a little bit different to the UK in that regard. And there's no move here [australia] to get rid of the tuition subsidies entirely so I think that’ll be a fairly stable feature of the Australian system.

Q: So, as you said, international students have become increasingly leaned on income sources, for, it seems all universities. And in the UK at least, often we find this is because domestic students' fees are capped, whereas international students’ fees are not. First of all, do you know the extent to which they have been growing over the past few years in terms of the global picture?

A: They’ve been growing, at least in all the English speaking countries, except for [during] covid, heavily driven by China and India, to less extent Latin America. And so this is driven in part by growing middle classes in countries that haven't historically had high higher education participation rates. And so what we're seeing is in some ways, it's very very interesting from European, the United States and Australia, you know, mass higher education comes from the domestic provision of higher education, or as, in some of these other countries it's proceeding at such a rapid rate that their local institutions can't keep up, or are not desirable to the local population. And so we're seeing this huge movement of people around the world which is creating massive commercial opportunities for particularly English-speaking universities.

Q: Also in our research, we found universities are employing different tactics in order to get an edge in the international market. And they're employing marketing agencies and student recruitment funds in these countries. Is this the same in Australia as well?

A: Yeah, it is. And so there's some controversy and increasing regulation around agents - they don’t necessarily give good advice that might give cooled advice to the students about what universities they should attend and the reason for that is typically they get commissions from the university for recruiting students, and therefore is, in some places an interesting development in the market as, if it's [university choices] confusing you - being in another country and don’t know a thing about the universities or nothing in detail. An agent in theory can be quite useful. But the question is, whether they're getting reliable advice about their options. The other thing in Australia, I think also in the Uk is the international students are motivated by migration as well as academic concerns, and so in Australia, sometimes the agents have really been playing up the migration angle, you know, strategizing about what course to do, and you know, often going to the cheapest university that will help you deliver that migration outcome. Including, in Australia, going to reach-on universities where you can get more points for future permanent residents applications If you've gone to a regional university.

Q: Another point in our research findings that we've turned up is the amount of surplus in general, all of the Russell Group universities have generated in the past 5 years. As you can imagine, it's substantial and basically equates to profit, If they were not charitable organisations. So the question we’re really posing with our article is to what extent is it ethical to keep increasing the fees for international students when they’re admittedly earning and generating all of this income.

A: It's actually a great question because even though there are obviously some international students from very wealthy backgrounds. A lot of them are not, and in Australia what we find is often they work long hours prone to exploitation. They make up a drain layer market because they're desperate to earn money to pay these fees often with the hope that they'll all be rewarded in the long run, because they will get permitted residence in Australia. But it is creating all sorts of ethical dilemmas I think, not just in the higher education industry, but in Australia more broadly in creating this large pool of highly exploitable temporary migrants.

On the other hand, the unis take the view that this is essentially a commercial industry, and they charge the fees that the market will bare, and from their point of view they're recycling this money into research activity which is achieving the mission of the University, and, you know, probably has other public benefits associated with it. So long as the research is successful, they do rationalise it but I'd say, I'd be pretty uncomfortable charging someone from India, a pretty poor country, much more than we are students from Australia, a fairly wealthy country.

Q: In terms of international students’ money do they see a good return on investment?

A: It depends on how you see the return on investment. If it's a direct investment for their education the answer is clearly they don't. But say at the Russell Group, I imagine here, and certainly in the group of the University of Brussel group equivalent here they are buying prestige and this largely comes from research, top rankings, etc., and the money is helping to buy those rankings.

So in a kind of strange indirect way, by having a degree from a more prestigious university, there in fact, getting something for all the money I have spent, even though it's probably typically not gonna pay off in terms of a better experience in university, or necessarily even, you know, particularly high earnings after they complete their degree and get a job.

Key Facts from Our Findings

In the year 2020-21, 13 out of 24 Russell Group universities received more than 50% of their income from tuition fees. Only 4 in 2017.
Only one in four students who started full-time undergraduate degrees in 2020-21 is expected to repay their debt in full.
The money Russell Group universities receive from the government has grown by 17% in the past 5 years. Income from tuition fees has grown at double this pace: 35.5%.
In 2020, the operating surplus of the Russell group was £2.5 million.
In 2020-21, Oxford and Cambridge are the only members of the Russell group that do not have tuition fees and education contracts as their most lucrative income stream.
In 2021, the number of international students rose by more than 20% at 16 of the 24 universities compared to 2016. The University of Glasgow, for instance, saw its number of non-EU international students double.
In 2021, 21 out of 24 Universities saw these international students occupy a greater portion of the overall student body compared to 2016.
The University of York said it spent nearly £9 million on student agencies for recruiting students.
Oxford, Cambridge and Imperial College said they do not use student agencies for recruitment.

Data Visualisations