Will private tuition solve Scottish university finances?

Recent months have made it clear that Scotland’s university sector—like its colleges—is at a critical financial crossroads.

What has become clearer this week, however, is that Scottish universities are not facing these challenges in a vacuum. Instead, financial concerns are all part of the larger landscape in which universities across the UK try to cope with change while attempting to maintain the veneer of a joined-up, UK-wide higher education system.

The Herald recently covered two reports out of King’s College London (KCL), part of its broader research programme on the state of UK universities. The first featured survey results which appeared to suggest a growing contradiction among parents, students and university graduates: while the vast majority think positively about their decision to go to university (and would do it again), more are questioning whether universities are good value

More recently, and more directly relevant to a Scottish context, KCL’s collection of essays entitled “Higher, Further or Tertiary?” featured principals, researchers, and professors from Scottish, Welsh, English, and Northern Irish higher and further education.

The essays offered first-hand insight into how each of the four devolved governments in the UK are making financial and operational decisions that create four very different realities for universities. There were calls for seriously reconsidering how Scotland’s higher education sector is structured.

So what is the situation?

It is perhaps no surprise that in an essay collection ostensibly about how the higher and further education sectors can better collaborate, contributors from all four home nations chose to use their platforms to discuss funding.

Discussions and reports about higher education across the UK have been riddled with warnings that how universities are funded is not conducive to longevity.

As the editors of “Higher, Further or Tertiary?” put it this week:

“What the UK demonstrates, in each of its constituent nations, is that the funding of modern higher education is highly political, and consistently unstable. Financial strains are increasingly evident in all four countries.”

“Universities’ favoured source of income growth in recent years has been recruitment of international students, whose fees are not regulated. This is now under strain, because of wider concerns about migration.”

Contributors to a series of essays on UK higher education exprsssed hoped that Prime Minister Sir Keir Starmer and his new Government will alleviate fears of even further declines in international student numbers. (Image: Lucy North/PA)

Although there are hopes that a new UK Labour government squash the fears about migration policies severely restricting international students, sector leaders say that the underlying dependence on international students is itself cause for concern.

On the whole, the best and most reliable safety net protecting Scottish universities from any “consistently unstable” funding streams has been international student tuition. It is largely unregulated and allows universities to come closer to recouping the actual costs of delivering degree programmes for domestic and international students.

Except, there is an important difference between reliance and over-reliance.

This was the message back in June when higher education leaders told Holyrood’s  Education, Children and Young People’s Committee a frank tale about the situation universities are facing.

Professor Iain Gillespie, Vice-Chancellor at the University of Dundee and convenor of Universities Scotland, told MSPs on the day that what some commentators might describe as higher education’s worst-kept secret – that international student fees are cross-subsidising Scottish student tuition – is of course no secret at all.

In fact, university financial planning is largely built on that assumption, he said.

“That’s been the case for quite some time, and our funding model is predicated on that.

“Scottish students cost money, and we need to subsidise Scottish students through the funding model.”

But for many universities in Scotland, that revenue stream has begun drying up, with some seeing a decline of as much as 75%, he told MSPs.

Add to that questions about how much the Scottish Government will fund the sector year-on-year (the most recent budget included a 2.7%, £32.3m reduction in cash terms), and the result is that prominent names in the sector are beginning to call for a new approach.

Is there another way?

There has been no shortage of proposals to address the university sector’s reliance on international fees. Recently, headlines have been lit up with high-profile names suggesting radical changes—or at least discussions about radical changes.

Reactions have been heated, if mixed. Probably the most controversial suggestion is to allow Scottish families to pay tuition fees. This sparked a debate when University of Edinburgh Principal and Vice-Chancellor Sir Peter Mathieson wrote about it in The Herald, and again when Sir Paul Grice, vice-chancellor at Queen Margaret University, suggested Scotland should consider a “compromise” approach.

In many ways, the backlash to these proposals is grounded in very real and concerning possible consequences. The Scottish Government can currently cap the number of Scottish student placements available at each university, effectively one way of managing how much public money gets funnelled into higher education.

Theoretically, allowing families to pay the £1,820 fee instead of the government could allow more students to attend their preferred university without further straining taxpayers.

However, this change would require several safeguards. Universities will still be limited by the capacity they can deliver each degree programme, and mechanisms need to be in place to ensure that Scottish families who circumvent placement caps by paying fees are not also able to circumvent admissions requirements.

Principal and Vice-Chancellor of the University of the West of Scotland Prof James Miller outlined how Scotland's free tuition policy impacts university planning. (Image: UWS)

Although it sounds straightforward, universities are under severe financial strain. As Professor James Miller from the University of the West of Scotland wrote in his essay “The cost of ‘free’ higher education: university number controls in Scotland”, the Scottish Government’s stance on free tuition for Scottish students “facilitates the very laudable principle that ability is the key determinant to accessing higher education in Scotland and not socioeconomic background.”

But, he continued, it does not fully fund the costs of university education and requires universities to meet tricky targets:

• enrol more than 2% below the allotment, and universities will face clawbacks
• exceed the allotment by more than 10%, and they will face penalties
• for students enrolled less than 10% above their allotment, universities will receive only the £1,820 student fee for each, rather than the full grant funding, which can approach £16,000 for some degrees

Allowing Scottish families to pay fees can give universities more financial space to plan around these constraints without fear of clawbacks or penalties. But it also opens the door to some perverse incentives.

So what’s the catch?

As Prof Gillespie explained to Holyrood, and as Prof Miller and Sir Peter wrote in their essays, £1,820 does not cover the cost of a student’s university education. According to a 2024 study, domestic students cost the Scottish public five times what they do in England.

Yet Scottish higher education institutions receive roughly 23% less funding per student than English institutions (the situation is even more stark for Scottish colleges offering higher education instruction, which receive 51% less than English institutions and 36% less than Scottish ones).

So the obvious questions arise: if Scottish families are going to be allowed to pay their own tuition, and £1,820 isn’t enough to cover education, should they be asked to pay more? Should they be required to pay more? Should they, perhaps, be allowed to name their own price?

Recent scandals put American universities at a crossroads for how to handle student admissions and private donations. (Image: Markus Leo on Unsplash)

The last might sound flippant, but scandals in the United States have proven that when the free market mixes with higher education, lines can quickly become blurry.

In 2019, Yale and Stanford University were two of the well-renowned universities implicated in schemes that allegedly allowed the children of wealthy parents to attend without proper qualifications. It exposed several concerns about the role of financial donations in American university admissions. It sent some celebrities to jail for their part in the scheme.

Is there any room for change?

Of course, the concerning consequences outlined above are not guaranteed. A serious review of how universities and colleges receive money to provide higher education could establish the right safeguards and potentially lighten the financial strain on institutions.

In any case, however, the discussions remain entirely hypothetical for now. The Scottish Government has yet to show an interest in adapting, much less abandoning, its policy stance on student tuition. 

When asked if the government has considered increasing the amount it pays universities per Scottish student, the Scottish Government reissued a statement made in June about its £1 billion investment in university teaching and research.

A Scottish Government spokesperson added that the government is "resolute in its commitment to free tuition" and again reissued a statement made in June about how the policy impacts students, but did not directly address questions about alternative, additional approaches to funding.

“The latest data shows since this policy was put in place, the number of Scottish students entering full-time first degree courses at university has increased by 31%, with record numbers of students from our poorest communities as a result of the Scottish Government’s commitment to widening access to university.

"Scotland’s student debt levels are also the lowest in the UK, almost three times lower in than in England.”