The hidden deficit: why the university funding crisis is a social mobility crisis

by Eve Jacobs

Here at The Access Project, we have been keeping a close eye on what is happening within the higher education sector. The landscape is changing, but what does this mean for our students?

There is a squeeze across the whole UK university sector, driven by financial pressures and a shift within the job market. In November 2025 the University of Nottingham announced the suspension of 48 courses, including those from the departments of modern languages, music, theology, and architecture. Although a stark example, this decision reflects the overall challenge faced by higher education institutions. Other higher tariff universities such as Cardiff and Sheffield are proposing or enacting similar cuts with seemingly more universities to follow.

Although there has been a media focus on the reduction in courses, the true danger of this funding crisis is not what happens in the lecture theatres, but what happens to the vital support structures that allow under-resourced students to access university and supports them throughout.

Understanding these changes is essential for me and my colleagues so we can best support students coming from an under-resourced background to ensure they have equal access to opportunity. The strategic decisions made by universities today will drastically impact the opportunities available and choices of students in the future. What are the main drivers for the financial crisis within the higher education sector? And what impact will this have on our students?

The shifting higher education funding model

Across the sector, we are seeing universities selling buildings, cutting staffing numbers, reducing research output, and limiting the courses on offer. The main driver for this is financial: universities are no longer in a stable position due to rapid changes to funding. In 2011/12, tuition fees made up 53% of university funding.

The rest came from a variety of sources, with research funding and government support covering a quarter of the total. As the landscape has changed and these two main funding streams have decreased, tuition fees have been left as the main source of income. According to HESA data, in 2022/23 tuition fees were responsible for a massive 93% of university funding.

The real term value of tuition fees has fallen by a third since 2012. The Russell Group estimates that English universities supplemented the cost of undergraduate education by an average of £2,500 per UK student per year in 2022/23. It is hard to ignore the devastating position this puts universities in. The Office for Students predicts many universities will face significant deficits by the end of 2025-26 with a small number facing liquidation and almost 1 in 6 institutions having less than 30 days liquidity.

Three-pronged financial deficit

I want to delve deeper into the reasons for the financial troubles faced by universities.
 
1. The tuition fee freeze
The tuition fee freeze is the most direct cause of the financial issues universities are facing. In 2012 tuition fees were raised to £9,000. In 14 years, tuition fees have only increased by £790. Had fees risen in line with inflation, they would be closer to £15,000.

This, paired with universities ever-growing reliance on tuition fees, has created an impossible situation – costs are increasing in every direction while revenue is consistently decreasing.
 
2. The international student deficit
The UK higher education sector has been partially propped up by the fees of international students, who contribute over £10 billion annually. The Tony Blair Institute for Global Change has found international students are on average paying 2.6 times the fees of their UK counterparts and effectively subsidising the cost of a UK student’s education by £2,588 per year. However, the number of international students coming to study at UK universities is decreasing, thereby widening the funding deficit.

Policy changes including restrictions on dependent visas, higher visa fees, and a review of the graduate route allowing students to work in the UK for 2-3 years after graduation, have led to a drastic reduction in international student numbers.  We have seen a 17% drop in study visa applications in 2024 and a more dramatic drop of 31% in sponsored study visas.

While the UK government navigates conflicting policy objectives – reducing migration and maintaining financial stability within the higher education sector – the UK university sector is subject to tensions that are increasingly difficult to reconcile.
 
3. Research funding reduction
Universities are given block grants for research as part of the dual support system. Quality Research (QR) Funding is given to universities based on the quality of their past research: this pays for researcher salaries, library subscriptions and seed grants. Even though QR funding has gone up on paper, its real value has been eaten away by rising costs. Without stable QR funding, universities struggle to retain the specialist staff needed to complete high-quality research. Research grants have gone from contributing 13% towards university income to contributing towards the overall deficit.

Bridging the gap: Why the third sector must step in

Students from under-resourced backgrounds often require more institutional investment – whether this is through specialised outreach, context-led admissions or pastoral support. When universities are operating under thin margins, support like this becomes a discretionary extra that is likely to take a hit. The removal of pastoral support, whether this is in the form of transition mentoring, skills workshops, bursaries or hardship funds, effects students from under-resourced backgrounds disproportionately as they are most likely to access this support. Our students need to be able to access the ongoing pastoral support necessary for their success.

As institutional support structures are being eroded, the responsibility to safeguard social mobility falls even more so onto the shoulders of the third sector. Organisations like The Access Project are now actively bridging the gap created by the university funding crisis. When university infrastructure is scaled back, external targeted mentorship and support become the primary mechanisms for creating equal opportunity within higher education.

I believe we cannot allow this funding crisis to widen the accessibility gap and strip under- resourced students of the support they need. The work of social mobility charities like ours is more important than ever. Education should never become a luxury reserved for those who can afford to navigate it.

Eve Jacobs works for The Access Project as a University Access Officer, based in the West Midlands.