| Practice area: | Education and Labour Markets |
|---|---|
| Client: | Universities UK |
| Published: | 12 May, 2026 |
| Keywords: | economics of education higher education 2026 Public Policy |
To provide evidence to the Treasury Select Committee’s inquiry into student loan repayment terms, we were asked by Universities UK assess the Exchequer and graduate contribution to total teaching funding per student per year in England. We assess these contributions for both the 2025-26 student cohort (under the current Plan 5 loan repayment terms) and the historical 2012-13 student cohort (which was subject to Plan 2 loan repayments). We analyse three different scenarios for the 2012-13 cohort, given the various changes in their Plan 2 loan repayment terms and wider macroeconomic conditions since then.
The analysis focuses on English full-time first-degree students only, and investigates:
- Total teaching funding per student, capturing the tuition fee and teaching grant funding received by HE providers in England.
- The ‘Exchequer contribution’ to this funding, including the teaching grant and the share of the tuition fee loan expected to be written off by Treasury.
- The ‘graduate contribution’, capturing the share of the fee loan that is expected to be repaid.
We find that:
- 2025-26 (Scenario D): The current Exchequer contribution to total teaching funding per student stands at £2,480 (based on Plan 5 loans). This equates to 23% of the total teaching funding per student.
- 2012-13 (Scenario A): Under the original Plan 2 terms (i.e. the original funding intentions of the Government at the time) and the original discount rates used to estimate the Government’s student loan write-offs at the time, the Exchequer was expected to contribute 54% of total teaching funding per student in 2012-13 (£7,720).
- 2012-13 (Scenario B): Considering the original Plan 2 terms but accounting for changes in wider economic factors (by using the current 2025-26 discount rates), the Exchequer contribution per student in 2012-13 was £4,320 (30% of total teaching funding per student). This means that the Exchequer contribution per student is £1,840 lower (43%) in 2025-26 in real terms than in 2012-13.
- 2012-13 (Scenario C): Looking at the current actual Plan 2 terms (using current 2025-26 discount rates) – the 2012-13 Exchequer contribution to total teaching funding per student stands at £3,580 (25% of total). Hence, even after the Plan 2 system changes, the Exchequer contribution to teaching funding per student in 2025-26 is still £1,100 lower in real terms (31%) than in 2012-13.
In summary, across every measure/scenario, the level of Exchequer contribution to total teaching funding per student in England has declined since 2012-13.
The full report is available here.
The analysis follows our earlier publication on behalf of HEPI and the NUS which looked in more detail at Plan 2 student loan repayment terms, for the 2022-23 student cohort.