The Autumn 2025 Budget landed this week—and while much of the early commentary has focused on tax and spending headlines, the detail for the education sector is significant and worth unpacking, as the changes carry real long-term implications for universities, students, and the UK’s competitiveness.
The biggest structural shift is the proposed international student levy, now out for consultation. From 2028, providers would pay a flat £925 per international student, with the first 220 students being exempt.
Because the levy isn’t tied to fee levels, institutions that recruit large numbers of lower-fee international students will be hit the hardest. Some universities could lose the equivalent of 10–14% of their international income while research-intensive universities may face only marginal impact. Many of these institutions rely on that income to support domestic teaching and research, so the policy removes funding from those least able to absorb the shock.
All of this lands against a backdrop of a sector already under intense strain. Over the past year alone, more than 10,000 roles have disappeared across UK universities. We’ve seen large-scale reductions in academic posts and significant contractions in research budgets. The financial resilience of the sector is already fragile, and the levy risks compounding that picture.
The Wonkhe analysis reports that although the levy is expected to raise £445 million, sector-wide income would still fall by £270 million, and the government anticipates 14,000 fewer international students in 2028–29. That means more than half the levy’s cost is likely to be passed directly to students through higher fees, with clear risks to the UK’s global competitiveness. Reduced demand affects not only university balance sheets but also local jobs, regional economies, research capacity, and the diversity and international reach of our campuses. Ultimately, it is hard to see how reducing our universities’ ability to attract international talent strengthens the country in the long run.
Alongside the levy, the Budget includes other key developments:
- Tuition fee caps will rise in 2026–27 and 2027–28, finally tipping over the £10,000 mark before future increases become linked to Teaching Excellence Framework (TEF) outcomes.
- Maintenance grants return from 2028–29, but only for low-income students studying priority subjects and at relatively modest levels.
- Maintenance loans will increase by 2.7%, yet parental income thresholds remain frozen—making it harder for students to access maximum support.
- Lifelong Learning Entitlement (LLE) change ends the current split in parental contributions for families with two children in higher education.
- The Plan 2 loan repayment threshold will be frozen from 2027–2030, effectively a stealth tax on graduates.
- A cap on salary-sacrifice pension contributions could cost individual institutions £1–3 million per year.
- And from 2027–28, rapidly rising SEND costs will fall within DfE’s budget envelope, placing further pressure on post-18 spending.
Taken together, these measures add up to a challenging period for a sector already grappling with financial strain, workforce reductions, and increased regulatory complexity. The risk is not only to individual institutions but to the wider national ecosystem: skills, innovation, regional growth, and global influence.
How can we help?
If you’d like to discuss what any of these changes could mean for your organisation, we’re always happy to chat.
