According to the Higher Education Funding Council for England (HEFCE), English universities are likely to face ‘consequences’ if tuition fees are not increased after two years, following an annual report on the financial health of the sector.
Tuition fees are currently capped at £9,250 per year, meaning universities already have very little surplus. The government’s decision to freeze the fees at this price, instead of increasing them in line with inflation, is set to reduce universities’ income by £113 million in 2018-19, and £333 million in 2019-20.
It is expected this will also have a knock-on effect on sector surpluses, with some institutions even expecting to make losses of up to 18.6 percent of their total income.
An additional impact of these changes will include an increasing reliance on tuition fees paid by international students, which are predicted to account for 27.7 percent of university income by 2019-20.
The way this affects universities’ performance is set to vary widely, with some expecting an increase in overseas fees while others are predicting falls of up to 71 percent. As a result, universities are predicted to become more reliant on borrowing.
The report describes the trend of increased borrowing as “clearly unsustainable in the long term”, and predicts increased debt in the education sector.
Other factors which affect universities’ chances of achieving financial projection include the uncertainty of Brexit, increasing global competition, and domestic policy changes.
The report states that these factors will ‘present challenges’ to institutions in the coming years.
This will mean a shift in focus towards individual universities’ achievements, with the report concluding that “any fall in overall levels of confidence in the sector could restrict the availability of finance and put significant elements of the sector’s investment programme at risk.”