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10 March 2020

Cutting tuition fees will make research funding deficit worse, think tank warns

A new report says charging international students more can only subsidise so much at UK universities. 

By Rohan Banerjee

Universities in the United Kingdom are facing a research funding deficit and reducing tuition fees could make the situation worse, a think tank has warned.

A report from the Higher Education Policy Institute (Hepi) found that the gap between the money given to UK higher education institutions for research and the actual cost of conducting it now stands at £4.3bn, up from £3.7bn in 2017-18.

That gap has been plugged, in part, by subsidies from international students’ fees. These are, on average, charged at £5,100 more than the actual cost of delivering their courses. Approximately £4,250 of this figure, according to Hepi, is put towards reducing the deficit for research.

If fewer international students attend UK universities after Brexit, however, that gap may become harder to manage.

Hepi’s report warned the UK government against following the recommendation of last year’s Augar Review into higher education, which suggested slashing tuition fees in England from £9,250 a year to £7,500.

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The think tank has calculated that universities at the moment are close to breaking even on what it costs to teach domestic undergraduates. But lowering tuition fees, it suggested, would lead to losses. 

Nick Hillman, the director of Hepi, said in a statement that “universities roughly break even on teaching home students but make a big loss on research. They fill in part of that gap from the surplus on teaching international students. But they now face a looming large loss on teaching home students, for example because of tweaks to tuition fees in England.”

He added: “If that happens, they will have to use international student fees to subsidise home students and there will be less money for covering gaps in research funding.” 

This would make it more difficult for the government to meet its annual target of 2.4 per cent spending of national GDP on research and development, Hepi’s report  said.