How much money does the government need to give universities to cover the cost of educating Scottish students? 

Soon after we launched our investigation into university finances, we realised we needed this information to answer a key question: does Scottish Government-funded tuition for home students cover the costs of teaching them? 

Our full investigation into that question turned up some interesting results, and stakeholders have responded to say it could form the backbone of a constructive conversation with government.

But there is still more work to be done in the sector.

For some time, there has been broad consensus in the sector that it does not. Evidence supporting this conviction comes from various sources, from official Scottish Funding Council (SFC) reports, analyses of Scottish university funding by the Institute for Fiscal Studies, and budget briefings prepared by university stakeholder groups representing institutions and staff alike. 

So we know there is a gap. But it’s important to make clear that the identification of a gap should not be considered an indictment of government policy. 

This is in part because the Scottish Government provides funding for Scottish students in a variety of ways. The most visible of these is the SFC’s main teaching grant, which includes a base tuition fee for each Scottish student (£1,820 for first-time undergraduates) and additional funding which changes in value depending on a student’s chosen course of study.  

There are also supplementary sources of public funding, which are not always tied to specific students but are meant to support research or the teaching of particular subjects – often referred to as “expensive strategically important subjects”. Essentially, the government subsidizes students studying more expensive subjects. 

But here’s why our initial question is so important: no one actually knows how much it costs to teach any given subject. And there is no way to evaluate the adequacy of university funding without having the cost of educating a student as a baseline.

Yet that answer is nearly impossible to find. In fact, it is not in available public financial data. 

This is troubling.  

With the higher and further education funding model included in the Scottish Government's wide-ranging reform agenda and the future of free tuition becoming a topic of public and political discussion, shouldn’t stakeholders have a common understanding of the cost? How can universities argue that they need more money from the government to cover the cost of teaching without disclosing how much they need? 

And if there is a continued commitment to free tuition for Scottish students – which almost all political parties and stakeholders have told us they believe in – then any extra money will come from the Scottish Government and taxpayers. Shouldn’t taxpayers know how much they are being asked to shoulder? 

The fact that all of these conversations are already taking place suggests that it shouldn’t take a group of reporters dedicating three weeks of full-time work to try to answer the question at the heart of it all.

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Our struggle to calculate the “cost of a degree” revealed how inaccessible the necessary information is. Every method we considered had drawbacks. Part of the complexity results from a basically good quality, which is that the university sector in Scotland is exceptionally varied. 

In fact, calling it the university sector is misleading because it involves institutions providing higher education across various platforms and in wildly different financial and operational contexts. 

The approach we eventually settled on isn’t perfect, but it is better than other methods available. 

First, it is based on an official government report and research done by financial experts with knowledge of the higher education sector. 

Even though it relies on research done in England, the university sector is comparable across the UK regarding the baseline costs associated with teaching – even if funding models are very different. This is on purpose. It helps ensure that institutions recognise and enforce teaching and marking standards at the same level and that degrees are comparable regardless of the institution that awards them - consider that when student work requires an external examiner, Scottish students may be marked by academics from English universities. 

Finally, this method attempts to estimate the cost of teaching specific courses rather than an analysis of what institutions spend on those courses. Arguing for the difference between costs and spending may sound like quibbling over semantics, but it’s critical.  

As one university planner explained, spending can be seen as a reflection of what universities have, not what they need. In the context of this investigation, spending is a more subjective measure. For some institutions, it reflects how they can go beyond the standard requirements due to available surplus. For others, it might reflect making the most of a shortfall. 

Estimated cost, however, is an attempt to put an objective price tag on what universities need to deliver a course effectively, including the necessary resources and staffing.  

The results are an approximation of the gap that everyone agrees exists, but hasn’t quantified. To be clear, we haven’t quantified it either. Instead, we’ve calculated the difference between what the SFC gives Scottish universities in tuition and what the DfE estimated English universities need to teach the same courses.

We’ve been clear that our analysis is not prescriptive, but our calculation comes closer to addressing a key question at the centre of discussions about the future of public funding for universities.