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uni_funding
A vision for higher education funding





We need to rethink how we fund higher education
The world is changing fast: how we work; create, share and receive knowledge; deliver value; and connect to people around the world. Our higher education system and the way we fund it needs to adapt to the rapid pace of change as individuals and the economy place new and changing demands on how and what it delivers.
We have developed a framework for building a robust funding system that puts higher education on a sustainable and flexible footing. Our proposed funding system will:

  1. Re-direct government funding back into teaching, resulting in lower fees
  2. Reform student support to target those most in need
  3. Increase access and support for students who learn while in employment
  4. Use a progressive, income-contingent repayment system
  5. End the one-size fits all approach
  6. Introduce a single regulatory system
  7. Be genuinely flexible, expandable and market-driven – able meet the needs of our future economy
  8. Re-establish the Government–student contract
  9. Be cost-efficient for Government

Click here to download a printable version of the principles.

Sign up to the principles
If you would like to be involved in our workshops and be kept up to date please sign up here:

We will be developing this framework collaboratively with Vice-Chancellors, economists and experts from across the sector and outside HE, in the UK and overseas.

Find out more about the project and follow us on Twitter #UniFunding.

Current limitations
The limitations of the current system stem from operating a single, expensive funding system for undergraduate provision. Problems include:

  • a potentially unsustainable and unaffordable system in the long-term;
  • a cap on student numbers despite the need for more graduates in our economy;
  • a lack of financial support for post-graduate and second chance students, which cannot be easily resolved under current loan conditions;
  • the public being unable to see where the Government is investing in higher education, with subsidies largely invisible to students;
  • the long repayment periods for graduates (26 year projected average repayment period and growing), making the system burdensome; and
  • the lack of space for new and private providers in the system without taking numbers away from established providers.
The current system is unable to adapt to our future needs
Trying to adapt the current system will not deliver what we need for the future. Forcing post-graduates into the highly expensive system for undergraduates is unaffordable.

Trying to squeeze new providers into a system that is already constrained has zero sum gain with numbers having to be taken away from high-quality, established providers to create space for new providers within overall student number controls and funding limits. Making minor adjustments to the graduate repayment system or the regulatory system are also just sticking plasters that will not address the underlying problem: that we are trying to operate a ‘one size fits all’ approach.
The long-term future work undertaken by University Alliance provides persuasive evidence that the UK needs to break this principle and embrace change.

Why this matters
To put it starkly, we either need to grasp the need for more radical reform or we risk an expensive single system, designed primarily around young, undergraduates, constraining our ability to meet the diverse needs of individuals, society and the economy in future decades.

The labour market needs to be able to adapt to rapid changes in technology, globalisation and increased economic uncertainty. Creating a dual or multiple system approach is critical to ensuring the UK achieves a truly diverse HE system that is fit for purpose. We need a new, long term vision for higher education funding that will underpin such a system.

If you would like to be involved in our workshops and be kept up to date please sign up here:

Developing a new approach
University Alliance is responding to this challenge by developing a proposal for an alternative funding system for the long-term future of higher education. We are doing this collaboratively with our Vice-Chancellors, economists and experts from across the sector, outside HE, as well as experts from overseas. We will also be exploring the potential for a return to a UK wide system for student finance and support.
Maintaining existing principles
Any revised model must maintain the principles on which the current system is based. They sought to ensure that the system:

  • is sustainable and affordable for students, Government and graduates
  • achieves shared investment in HE from the Government and the individual
  • is well regulated to protect the interests of students, public investment and the reputation of UK HE
  • is free at the point of use for students
  • drives quality, partly through market forces
  • ensures fair access to all types of higher education
  • achieves an expandable and flexible sector, able to grow in both diversity and size to meet the needs of our economy and society
If you would like to be involved in our workshops and be kept up to date please sign up here:

Framework of new proposals
We have developed a framework that provides an outline of the areas we will be exploring and a structure for our conversations over the next few months:
For the student

  1. Significantly reducing fees on publicly-subsidised courses
    We will look at options that would re-direct the massive invisible subsidies on loans back into direct public funding for teaching in order to reduce fee levels and achieve a more visible balance of public and private investment in HE courses that are publicly-subsidised.
  2. Reform of student support to target those most in need
    We want to explore whether funding for student support can be more fairly distributed to those who need it most, including the removal of universal access to student maintenance loans.
For graduates and those already in employment

  1. Increased access and support for students who learn while in employment
    We will ensure that a part of the system is built intentionally around those who learn whilst in employment, including post-graduates, with a lifetime maximum loan allocation to remove existing barriers for returning students and affordable repayment conditions.
  2. A progressive, income-contingent repayment system
    We wish to explore options that will achieve a much shorter (5 to 10 year) average repayment period, removing the unpopular lifetime burden of contribution and enabling Government to invest directly into teaching rather than loan subsidies.
For universities, alternative providers and employers

  1. The end of the one-size fits all approach
    A dual system would allow us to operate a publicly-subsidised system on one side, with a much more flexible, demand-led and entirely market driven system running in parallel, designed to support employers and the professions and to create space for alternative providers.
  2. The introduction of a single regulatory system
    We will look at a regulatory framework that could oversee multiple systems and markets in HE, taking a differentiated approach across different markets.
For society, the economy and Government

  1. A genuinely flexible, expandable, market-driven system which can meet the needs of our future economy
    We will ensure there is a part of the sector that can expand at zero cost to Government, is built around those who learn whilst in employment, and embraces a full range of providers.
  2. Re-establishment of a Government – student contract
    The balance of funding between Government and individual contribution will be redressed nearer to 50:50 for publicly-subsidised courses. This will ensure that a fair and equal contribution is being made by students and society.
  3. A cost-efficient system for Government
    We will seek to ensure the cash cost and long-term borrowing cost of the new system will not significantly increase for Government, with minimal impact on Public Sector Net Borrowing and Public Sector Net Debt.
If you would like to be involved in our workshops and be kept up to date please sign up here:

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