Tuition fees in England and Wales are set to increase in August 2025, sparking a debate about the value of a university education amidst rising costs. The annual cost of an undergraduate degree will rise from £9,250 to £9,535, a move universities argue is necessary for financial sustainability. As fees climb, the question remains: does a degree still offer a worthwhile return on investment through higher future earnings?
Alongside the fee increase, undergraduate students will have access to larger loans to cover living expenses. For instance, the maximum maintenance loan for students from England living away from home, outside of London, will increase from £10,227 to £10,544 annually. This announcement by the Department for Education (DfE) in November 2024 was justified as being in line with inflation rates.
Financial Strain on Universities
The rise in tuition fees comes amid warnings about the precarious financial state of many universities. The Office for Students, the regulator in England, highlighted that over 40% of universities anticipate financial deficits by summer 2025. The recent period of high inflation has diminished the real value of tuition fees, compounded by a decline in international student numbers, which traditionally help balance university budgets.
Students are cautioned about potential cuts to staffing and courses as institutions grapple with financial challenges. The situation is further complicated by the varying tuition fees across the UK, with Northern Ireland capping costs at £4,855 for local students and Scotland offering free undergraduate education for most Scottish students.
Rising Living Costs and Student Debt
Student living expenses have surged, with the Higher Education Policy Institute (Hepi) and housing charity Unipol reporting a significant rise in student rents. Average annual rents in university towns, excluding London and Edinburgh, increased from £6,520 in 2021-22 to £7,475 in 2023-24. Cities like Nottingham and Bristol have seen particularly high rent costs, 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 these costs, leaving students reliant on family support or part-time work to make ends meet. A 2025 survey found that 68% of full-time undergraduates were employed during term time, up from 50% three years prior.
“Without family support or part-time work, students will have no money to live off after paying housing costs,” warns Hepi.
Loan Repayment and Graduate Earnings
Most UK students are eligible for tuition fee loans, with maintenance loans available for living costs. These loans are means-tested, with interest charged from the day they are taken out. Recent changes to loan repayment rules in England mean students will likely repay more over a longer period than previous cohorts. Martin Lewis of MoneySavingExpert.com notes that the extended repayment period will increase costs for lower and mid-earners by thousands.
Graduates in England who began repaying in April 2025 had an average debt of £53,000, according to the Student Loans Company.
Despite the debt burden, data from the Higher Education Statistics Agency (HESA) suggests that graduates generally earn more than non-graduates. However, the financial advantage of a degree has diminished. HESA’s survey of 2020-21 graduates reported an average salary of £29,699 fifteen months post-graduation, with earnings varying significantly by subject and institution.
Subject and Gender Disparities
Research by the Institute for Fiscal Studies (IFS) reveals disparities in earnings based on degree subjects and gender. Women with degrees in creative arts and languages often earn similar amounts to those without degrees, while those in law, economics, or medicine earn significantly more. For men, creative arts graduates typically earn less than non-graduates, whereas medicine or economics graduates can earn up to £500,000 more over their lifetimes.
Social Mobility and Future Prospects
University education remains a potential pathway for social mobility, particularly for students from disadvantaged backgrounds. The Sutton Trust highlights that attending selective universities, such as those in the Russell Group, enhances social mobility prospects. However, only a fifth of graduates who were eligible for free school meals reach the top 20% of earners, compared to nearly half of private school graduates.
As tuition fees continue to rise, the debate over the value of a university education intensifies. While a degree can offer significant financial benefits for some, the increasing costs and debt burdens pose challenges for many students. The future of higher education in the UK will likely depend on balancing the financial sustainability of universities with the accessibility and affordability of education for all students.