Martin Lewis reveals tips students should know about university fees

Martin Lewis today warned that the biggest practical problem facing university students is insufficient maintenance loans, after it was revealed tuition fees will rise.

The MoneySavingExpert founder also said higher tuition fees – which are due to go up for the first time in eight years - won't change what most students pay each year.

The financial expert added that increasing tuition fees will only see those who clear the loan in full over the 40 years pay more, also saying that the rise is likely to be 'trivial' compared to the changes the last government made for 2023 starters.

University leaders have raised financial fears due to frozen tuition fees - currently set at £9,250 per year - paid by domestic students and a fall in international students.

Now, Education Secretary Bridget Phillipson is set to make a statement to MPs in the House of Commons this afternoon on higher education reform - and it is understood this will outline an inflation-linked rise in university tuition fees from next year.

The previous government raised the cap on fees in England to £9,000 per year in 2012, but it has been frozen at £9,250 for domestic undergraduates since 2017.

Today, ahead of the announcement, Mr Lewis posted a thread on social media explaining the situation given that 'student finance misunderstandings abound'.

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Firstly, he pointed out that higher tuition fees 'won't change what most pay each year', adding: 'For most, they're paid for you by the student loans company and you repay afterwards only if you earn over the threshold.

'The amount you repay each year, 9 per cent over the threshold, solely depends on what you earn not on what you borrow.'

Secondly, Mr Lewis said that increasing tuition fees will only see those who clear the loan in full over the 40 years pay more – with these people 'generally mid-high to higher earning university leavers only, so the cost of increasing them will generally be born by the more affluent'.

He continued: 'Most lower and middle earning university leavers will simply pay 9 per cent extra tax above the threshold for 40 years - and higher tuition fees won't change that'.

His third point looked at how the rise is tuition fees is 'likely to be trivial compared to the changes the last [government] made for 2023 starters'.

Mr Lewis said those starting last year had their repayment thresholds dropped to £25,000, from £27,295 a year. They also had the period they had to keep repaying for - unless cleared - extended from 30 to 40 years.

He wrote: 'So these higher annual repayments for longer, increased by over 50 per cent the amount many graduates will eventually have to pay back for going to university.

'Yet they were almost stealth changes because people can't intuitively feel the seismic impact.

'Changing tuition fees is a more obvious rise, but in reality has far less of an impact on the amount most will repay - though combined with the 2023 changes it does certainly up the cost.'

His fourth and final point related to loans, saying: 'The biggest practical problem for students isn't tuition fees - even if raised. It's the fact maintenance loans aren't big enough.

'English maintenance loans have not kept pace with inflation. I'd urge the government to couple the tuition fee loans with bigger living loans.

'If not it is a real risk to social mobility, with those from the poorest backgrounds likely to be worse affected.'

Universities UK (UUK), which represents 141 universities, recently called on the Government to increase funding for teaching in England by linking tuition fees to inflation and restoring the teaching grant.

A blueprint from UUK, published in September, warned funding per student in England was at its 'lowest point since 2004' and that the current £9,250 fee would have been worth £5,924 in 2012/13.

It added that any rise should be accompanied by additional support to help with the cost of studying - including restoring grants for the poorest students.

In a report in June, the Institute for Fiscal Studies (IFS) suggested that raising the tuition fee cap to match RPIX inflation would see fees rise by 2.1 per cent to £9,450 in 2025 and reach £10,500 by 2029.

Professor Shitij Kapur, vice-chancellor of King's College London (KCL), had previously suggested that universities in England needed between £12,000 and £13,000 per year in tuition fees to meet costs.

Home Office figures released last month showed there was a 16 per cent drop in visa applications from overseas students - to whom universities can charge significantly higher tuition fees - between July and September.

Since January, international students have been banned from bringing dependants to the UK with them, apart from on some postgraduate research courses or courses with government-funded scholarships.

Others reacting to the news included Dani Payne, senior researcher at the Social Market Foundation, who said today: 'The Government will need to take a firm hand with a sector that has been afforded more autonomy than its counterparts in other countries.'

She said previous analysis by the think-tank has shown that England has the most expensive university system in Europe.

Ms Payne also said upcoming analysis from the SMF will show that many institutions are spending substantially less than they are charging in tuition fees.

She continued: 'Unfortunately, the sector has failed to respond to calls to increase transparency around cost and spend.

'If universities want to retain the freedom they have previously enjoyed, they need to be more accountable and efficient with students and taxpayers' money.

'Otherwise, there is a risk that universities will just be back cap in hand to the Government again next year.'

Education policy analyst Tom Richmond, host of Inside Your Ed podcast, tweeted: 'At the risk of pointing out the obvious, if tuition fees creep up by £250 in 2025 to around £9,500, and this pattern is repeated for another couple of years, we'll hit £10,000 tuition fees in this Parliament.' 

Zarah Sultana, Labour MP for Coventry South, said: 'The Government's increase to tuition fees is wrong. Students shouldn't have to pay tuition this year, or any year.

'It's time to abolish tuition fees and cancel student debt because education is a public good, not a commodity.'

And Ellie Chowns, Green MP for North Herefordshire, said: 'Tuition fees have forced universities to prioritize profit over education and put many at risk of bankruptcy, while students face extortionate interest rates - except for those wealthy enough not to need a loan. They have been a disaster and should be scrapped, not increased.'