Tuition fees in England and Wales are set to increase in August 2025, as universities seek additional financial support amidst growing economic pressures. The annual cost of an undergraduate degree will rise from £9,250 to £9,535, prompting renewed debate over whether the financial burden of higher education is justified by future earnings.
The increase in tuition fees comes alongside a rise in the maximum maintenance loan available to students. For instance, students from England living away from their parents outside London will see their maintenance loans increase from £10,227 to £10,544 annually. The Department for Education (DfE) announced these adjustments in November 2024, citing inflation as a key factor.
Financial Strain on Universities
Warnings about the financial state of universities have been mounting. The Office for Students, the regulator in England, has highlighted that over 40% of universities anticipate financial deficits by the summer of 2025. This financial strain is exacerbated by a period of high inflation, which has diminished the real value of tuition fees, and a reduction in international student numbers, which traditionally help bridge financial gaps.
Students have been cautioned about potential cuts to staffing and courses as institutions grapple with these challenges. The financial landscape varies across the UK, with each nation setting its own tuition fees. In Northern Ireland, for example, the maximum annual cost is £4,855 for local students and £9,535 for others. In Scotland, tuition is free for most Scottish students but costs £9,535 for others.
Rising Living Costs
Student living expenses have also surged, according to research by the Higher Education Policy Institute (Hepi) and housing charity Unipol. Average annual rent in ten university towns and cities, excluding London and Edinburgh, rose from £6,520 in 2021-22 to £7,475 in 2023-24. In cities like Nottingham and Bristol, rents are particularly high, averaging £8,427 and £9,200 respectively. In London, the average rent for purpose-built student accommodation reached £13,595 in 2024-25.
Hepi warns that maintenance loans in England barely cover average rent, leaving students reliant on family support or part-time work. A 2025 survey found that 68% of full-time undergraduates worked during term time, up from 50% three years prior. Students also face significant expenses for food, transport, and course materials, with research suggesting an average weekly spend of £564, excluding rent.
Loan Repayment and Financial Aid
Most UK students can access tuition fee loans and means-tested maintenance loans for living costs. Interest is charged from the day the loan is taken out, with repayment rules varying across the UK. Changes in England in 2023 mean students are likely to repay more over a longer period, a move criticized by financial expert Martin Lewis for increasing costs “by thousands” for lower and mid-earners.
Graduates in England who began repaying loans in April 2025 had an average debt of £53,000, according to the Student Loans Company.
In contrast, students in Wales and Northern Ireland can access maintenance grants that do not require repayment. The Scottish government provides financial support for certain student categories, such as those with dependants. Students facing financial hardship can apply for additional funding from universities or charities.
Is a Degree Still Worth It?
Despite the financial challenges, most graduates earn more than non-graduates, according to the Higher Education Statistics Agency (HESA). However, the financial advantage of a degree has declined. HESA’s survey of 2020-21 graduates found an average salary of £29,699 fifteen months post-graduation, with earnings varying by subject and institution.
Research by the IFS think tank suggests women with degrees in law, economics, or medicine earn over £250,000 more in their careers than those without a degree. Men in similar fields earn £500,000 more, whereas those in creative arts may earn less than non-graduates.
University can enhance social mobility, particularly for students from disadvantaged backgrounds. However, the Sutton Trust highlights that only a fifth of graduates who received free school meals reach the top 20% of earners, compared to nearly half of private school graduates. Attending a selective university, like those in the Russell Group, offers the best chance for social mobility.
As tuition fees rise and financial pressures mount, the value of a university degree remains a complex equation. Students must weigh the potential long-term benefits against immediate financial burdens, considering factors such as field of study, institution, and personal circumstances.