Tuition fees in England and Wales are set to rise in August 2025, a move that comes amid growing financial pressures on universities. The annual cost of an undergraduate degree will increase from £9,250 to £9,535. This hike raises the question: does a university degree still justify the investment through higher future earnings?
The increase in fees, announced by the Department for Education in November 2024, aligns with inflation rates. However, the financial outlook for universities remains precarious. The Office for Students, the regulator in England, has warned that over 40% of universities anticipate financial deficits by the summer of 2025. This financial strain is exacerbated by a decrease in international student enrollment, which traditionally helps bridge funding gaps.
Financial Challenges for Students
Alongside rising tuition fees, students face increasing living costs. The maximum maintenance loan for students from England living away from home will rise from £10,227 to £10,544 annually. Yet, the Higher Education Policy Institute (Hepi) and housing charity Unipol report a sharp increase in student rents. Average annual rents in university towns, excluding London and Edinburgh, have climbed from £6,520 in 2021-22 to £7,475 in 2023-24. Cities like Nottingham and Bristol report even higher averages, at £8,427 and £9,200 respectively.
In London, the average rent for purpose-built student accommodation reached £13,595 for 2024-25. Hepi warns that maintenance loans barely cover these housing costs, leaving students reliant on family support or part-time work. A 2025 survey found 68% of full-time undergraduates were employed during term time, up from 50% three years prior.
Comparative Costs Across the UK
Tuition fees vary across the UK. In Northern Ireland, Northern Irish students pay a maximum of £4,855, while other UK students pay £9,535. In Scotland, tuition is free for most Scottish students, but other UK students face fees of £9,535. These differences highlight the regional disparities in higher education funding.
Students also need to budget for significant expenses beyond rent, such as food, transport, and course materials. According to Save the Student, a survey of 1,000 UK respondents indicated that students spent an average of £564 weekly in 2024, excluding rent.
Loan Repayment and Financial Aid
Most UK students qualify for tuition fee loans and maintenance loans, which are means-tested based on family income. Interest is charged from the day the loan is taken out. In England, loan repayment rules changed in 2023, extending the repayment period and increasing costs for lower and mid-earners. Martin Lewis of MoneySavingExpert.com noted that these changes could increase costs by thousands.
Graduates in England who began repaying their loans in April 2025 had an average debt of £53,000, according to the Student Loans Company.
In Wales and Northern Ireland, eligible students can claim maintenance grants that do not require repayment. The Scottish government provides financial support for students with dependents. Across the UK, students in financial distress can apply for hardship funding and may receive assistance from charities.
Is a Degree Worth the Investment?
Despite the financial burden, a degree generally leads to higher earnings. The Higher Education Statistics Agency (HESA) suggests that graduates earn more than non-graduates, though the premium has declined. HESA’s survey of 2020-21 graduates reported an average salary of £29,699 fifteen months post-graduation.
Earnings vary significantly by subject and institution. Research by the Institute for Fiscal Studies (IFS) indicates that women with degrees in law, economics, or medicine earn over £250,000 more in their careers than those without degrees. Conversely, men in creative arts earn less than non-graduates over their lifetimes.
Attending university can enhance social mobility, especially for students from disadvantaged backgrounds. However, only 20% of graduates who received free school meals reach the top 20% of earners, compared to nearly half of private school graduates, according to the Sutton Trust.
The Sutton Trust emphasizes that attending a selective university, such as those in the Russell Group, offers the best prospects for social mobility.
As tuition fees rise, the debate over the value of a university education intensifies. While a degree can lead to higher earnings and improved social mobility, the financial costs are significant. Prospective students must weigh these factors carefully when deciding on their educational futures.