How will increasing tuition fees affect YOUR money? Labor raises cap for first time in eight years – here’s what it means for refunds

Just days after the budget, the Labor government announced it will increase university tuition fees for the first time in eight years.

The move comes after universities continued to call for tuition fees to rise with inflation.

Education Secretary Bridget Phillipson said: “There is no point in keeping tuition fees low for prospective students if universities are not there for them to attend, nor if students cannot afford to support themselves while they study.” .

However, shadow education minister Laura Trott said: “This is another broken Labor promise to add to the long list.”

But what does the fee increase mean for prospective students? Here’s what you need to know.

What are the new tuition fees?

The change will see tuition fees rise by 3.1 per cent, from £9,250 to £9,535, an increase of £285. This is the first increase since tuition fees were frozen at their current level in 2017.

The increase is slightly above the current inflation level of 2.7 per cent, which would have seen rates reach £9,500.

The Government did not confirm whether there will be future fee increases to keep pace with inflation, as universities have been lobbying for.

Mr Phillipson said: “We will consider this and support for maintenance and the wider sector as part of the reform we intend to implement in the coming months.”

£9,535 a year will be the new maximum tuition bill universities will be able to charge. In practice, however, the vast majority of universities already charge the maximum fee of £9,250 and are likely to increase this to the new limit.

Alex Stanley, vice-president of higher education at NUS, said: ‘Higher education is in crisis right now. Students are being asked to foot the bill to literally keep the lights and heat on in their university buildings and prevent their courses from closing.

‘This is, and can only be, a band-aid. Universities cannot continue to be funded with an ever-increasing burden of student debt.’

Grace, who is currently a sixth form student at Downe House School, said: ‘Now that fees are increasing, my friends and I are considering other overseas universities much more seriously.

‘My friends studying in the US tell me that they are having really positive experiences, with lots of contact time, lots of good accommodation and also a wide range of social and non-academic opportunities. Other friends from top UK universities often say they don’t have such positive experiences.

Maintenance loans will also increase

Despite the negative news for student fees, the Government also announced that it would increase student maintenance loans to help fund their cost of living.

In addition to the 3.1 per cent increase in tuition fees, maintenance loans will increase by the same amount, adding up to £414 to students’ entitlement each year.

‘We recognize that students have been feeling the impact of the cost of living.

“That is why we have decided to increase maintenance loans, the loan that helps you cover your living expenses as a full-time student,” the Government said.

Students studying in London will see their maintenance loans increase to a maximum of £414, while those outside London will receive an increase of £317.

Meanwhile, students living at home will see their loans increase by £267, and students studying abroad will receive an extra £363.

Stanley commented: ‘This money will make a real difference to the poorest students and is a testament to the hard work of student activists over the last three years – at the moment students are left with 50p a week to live on after rent. and the invoices. .’

However, Izzy Hall, Gen Z expert at Student Beans, said: “While the increase in maintenance loans seems like a positive change on the surface, this potential extra £414 a year will do little to help the thousands of struggling students across the UK who can barely cover essential expenses and juggle multiple jobs outside of their studies.

When will the changes occur and will they affect current students?

The changes will come into effect from the 2025/2026 academic year, i.e. September next year for most university courses.

Alex Gallagher, chief strategy officer at Unidays, told This is Money: “For some prospective students, who are dealing with the rising cost of living, this could even tip the balance when making the decision whether or not to apply. a higher education.

‘Cost should not be an obstacle to continuing education. Students starting university next year will now face pressure to make their maintenance loan go even further to cover their living costs in addition to tuition fees. For some people, this could lead to difficult budget decisions.’

While there may have been some expectation that these changes would only affect new students, the Government said the new fees and maintenance loan increases will apply to both new students and those continuing their studies.

This means that first- and second-year students will face higher fees for the remainder of their studies, but they will also receive higher loan payments.

What does this mean for student loan payments?

Students may be concerned about the addition to their final payment bill, and it should be noted that the additional maintenance loan entitlement will also add to the amount they owe.

However, monthly payments will not increase as a result of these changes, and loan payments will depend on how much you earn.

Phillipson said: “Student loans are not like consumer loans, monthly payments depend on income, not simply the amount borrowed or interest rates, and at the end of any long term, any outstanding loan balance , including accrued interest, will be cancelled. .’

These increases mean the amount of debt students will have when leaving university will be higher – £699 more per year for those who take home the £414 maintenance loan increase.

Additionally, this means there is more debt on which interest will accrue, leading to higher earners paying more over their working lives, but also fewer people being able to fully pay off their loan.

Hall said, “We are also concerned that this increase has enormous potential to deter low-income people from applying to college.” Many students from these families are already worried about not being able to afford to study, and this announcement will only worsen these fears, further widening educational inequality in the UK.’

Will rates for international students change?

The Government did not announce any fee increases for international students. However, these students already pay up to £38,000 a year to study in the UK.

Indeed, it is because of the freezing of domestic tuition fees that universities have come to increasingly rely on high-paying international students to make up for the gaps left by lower fees in the UK.

According to Home Office figures, there has been a 16 per cent decline in the number of international students applying for UK study visas compared to last summer.

Colleges have become increasingly concerned this fall about their ability to stay afloat, something these tuition rate increases seek to address.