Introduction
Universities receive funding from many different sources and for various purposes. Analysis performed by Universities UK found that just under a quarter (24%) of funding for universities comes from direct government sources, with the majority of this support used to fund either teaching or research activities. Universities also have to allocate funding for other expenditure, such as upkeep of facilities.
The way research funding in the UK operates is referred to as the ‘dual support system’. Under this system, universities receive both quality-related funding from devolved funding bodies (e.g. HEFCE, the Scottish Funding Council) based on the excellence of previous research, and researchers can also apply for grants from the UK-wide research councils. Many universities also receive smaller amounts of research funding from EU bodies, business and charities.
Funding for teaching is more complex, and varies across all four nations. In England, some support is offered through HEFCE (such as for high-cost subjects) while the majority of teaching is funded through tuition fees, which were limited at £9,250 p.a. in 2017/18. The way graduates repay their tuition fee loans is income-contingent, which means they only begin paying once they earn a certain salary (£21,000 in 2017/18 for post-2012 students). Loans are automatically written off if the graduate does not repay the full amount after thirty years.
The fundamental principles of the Welsh and Northern Irish systems are similar. In Northern Ireland, universities have their tuition fees capped at just over £4,000 p.a. Under the current system in Wales, maximum tuition fees are set at £9,000 p.a., though there is a universal tuition fee grant available to students which covers around half of this amount (£4,096 p.a. for 2017/18). From 2018/19, though, tuition grants are to be abolished in line with the recommendations of the recent Diamond Review, in return for more generous maintenance support arrangements.
The undergraduate funding system Scotland is more distinct, with no comparable tuition fees charged to students. The majority of teaching funding comes directly from the Scottish Funding Council (SFC), with a smaller proportion being contributed by the Student Awards Agency Scotland (SAAS). In order to finance this system, however, the Scottish government has retained a cap on the number of Scottish and EU students that can go to university each year, a policy which was abolished in England in 2015/16. Scottish students can also take out loans for maintenance support.
Most universities in the UK also benefit substantially from international student fees, which are uncapped unlike fees for native and EU students. In 2014-15, international students paid an estimated £4.8 billion in tuition fees to UK universities (around 14% of total university income).