Top universities ‘will turn away more UK students’ as fees fail to match costs | Universities

Elite universities will turn away increasing numbers of UK students over the next few years in favour of more lucrative international applicants, experts and vice chancellors are warning.

Tuition fees for home students have been frozen at £9,250 a year since 2017. But as a result of rising inflation experts calculate that their real value has now plummeted to £6,000 – the equivalent of fees in 2010 – which universities say is significantly less than it costs to teach the average student. Many universities, especially at the elite end of the sector, have been increasing their number of international students to compensate for these losses.

With the number of 18-year-olds in the UK continuing to rise each year, leading universities say they won’t be able to meet the extra demand for places from British sixth-formers unless the government steps in. Professor Colin Riordan, vice-chancellor of Cardiff university, a member of the prestigious Russell Group, told the Observer: “At a time of demographic growth among home students, it is inevitable that it will be more difficult to provide enough places. But it won’t be because we can’t fit them in – it will be because we can’t afford them.”

Riordan is adamant that this is not a position any university wants to be in. “Ultimately, educating home students should be what a British university is for,” he said.

Universities are well aware that tuition fees – and especially any talk of raising them – are regarded as politically toxic with a general election looming. Riordan says ministers urgently need to talk about how to fix the funding of higher education, but he is pessimistic about that happening.

“There is no foreseeable future at the moment except the unit of resource continuing to shrink and things getting tighter and tighter,” he said. “We can see a cliff edge ahead of us and we are just going towards it.”

The Russell Group has estimated that universities will be losing an average of £4,000 for every UK undergraduate student they teach by next September. Mark Corver, co-founder of DataHE, a consultancy which advises universities, said: “The real value of the fee cap has now dropped to £6,000, and by the autumn it will have dropped even further.” He claims that this is “inflicting major financial damage on universities, but in a way which isn’t immediately visible”.

Corver said that ministers were wrongly “assuming that the supply of places for home students will always be there”. “These are businesses being asked to sell something at considerably below what it costs to make it,” he said.

Universities have used the declining real value of fees to defend refusals to meet staff demands on pay, despite five years of industrial action including a marking boycott that has meant thousands of students graduating without a grade this summer. The Universities and Colleges Union says their claims of hardship are over-egged, and after generating a record £44.6bn last year, the sector can “more than afford” to improve pay.

Nevertheless, Nick Hillman, director of the Higher Education Policy Institute thinktank, said that increasing numbers of home students not getting places at Russell Group universities would put considerable political pressure on ministers in the coming years. “Policymakers start taking issues seriously when it starts affecting the children of people like them,” he said.

Hillman argues that universities will inevitably be driven to limit numbers of any students they are teaching at a loss, while making sure they still hit government targets on the proportion of students from less privileged backgrounds.

“We need universities to be expanding, as demand for higher education is continuing to go up and the number of 18-year-olds is also increasing,” he said. “But sadly we are now returning to an unofficial cap on numbers.”

Simon Marginson, professor of higher education at Oxford, said English universities were now facing an “existential crisis”.

He argued that “the wheels have now come off” the system for funding universities introduced by the coalition government in 2012, which increased fees to £9,000 at the same time as removing any government funding for most degree courses.

Marginson said fees were “politically impossible to increase, especially in the middle of a cost of living crisis joined to a collapsing NHS”. But he said the Treasury had “got used to the idea that it no longer has to subsidise teaching and now resists any suggestion that it should do so”.

A spokesperson for the Department for Education said: “We are keeping maximum tuition fees frozen to deliver better value for students and keep the cost of higher education under control.”