Rising inflation sends English fee towards £10K – does it matter?

Researchers are divided over whether the 99 pence trick beloved of retailers actually works.

Known as “psychological pricing”, the practice of charging just below a round number dates back to before the UK ditched halfpenny coins and some studies have shown customers have grown wise to it.

While more of a policy quirk than a marketing ploy, the annual price for an English higher education has long sat in the region of £9,000 – but that could be about to change.

If, as anticipated, the Westminster government commits to again raising the English tuition fee cap based on current Office for Budget Responsibility forecasts for the RPIX measure of inflation – as was the case for the coming rise to £9,535 – it will hit £9,812 in 2026-27 before crossing the five-figure threshold in 2027-28, reaching £10,096.

These OBR forecasts are set to be revised this month and are expected to increase slightly as inflation rises again amid geopolitical chaos, but it would take an unlikely 4.8 per cent hike in RPIX to reach £10,000 any sooner.

Still, this figure has become something of a milestone in the fees debate, especially in the national press, where headlines have long focused on when it will be breached.

Hinting at potential political arguments to come, the Conservatives’ education spokesperson in the House of Lords, Diana Barran, raised the looming prospect of £10,000 fees in a debate about the already confirmed uplift last week, pointing out it would take typical student debt to £59,000 each.

Speaking to Times Higher Education, Alex Stanley, vice-president for higher education at the National Union of Students, warned that “raising fees and loading yet more debt onto students will only make higher education less accessible, especially for students from disadvantaged backgrounds who we know are more debt averse”.

But fees of £10,000 as opposed to £9,535 would, in reality, make only a small difference to overall debt.

Gill Wyness, professor of economics at the UCL Institute of Education, who has studied the impact of previous fee rises, said that while passing £10,000 could have “some emotional resonance”, there have been “much bigger fee increases which didn’t seem to have much impact on participation”.

Smaller, incremental rises have also generally proven far less controversial than the big hikes of the past.

Gavan Conlon, co-head of the education and labour market teams at the consultancy firm London Economics, said he felt, in agreeing to raise the fee cap once already, the “hard decision has already been taken”, and students and the wider public had broadly appeared to accept further increases as “not unreasonable”, given the additional costs universities have faced.

This will not prevent £10,000 being seen as a “staging point” and a chance to reflect on how charging fees has changed higher education, said Graeme Atherton, associate pro vice-chancellor for regional engagement at the University of West London, who added that he could foresee an impact on some students’ choices.

The belief that higher fees have generally not put off students masks the impact on groups such as older learners, among whom participation levels have dived, said Atherton.

“Different groups of the population have different attitudes to debt,” he said. “Thirty or 40 or 50 thousand pounds is a huge amount of money to people whose annual family income isn’t at that level.”

The fact that fees were increasing at all after an eight-year freeze could prove just as important as what amount they rise to, Atherton added.

“We’ve had a fixed picture for a period, and now it is starting to shift every year. We have a responsibility to prepare future students for that as once costs start to change, you get uncertainty – if you don’t know what you are going to pay for something, you are less likely to buy it.”

There has already been a plateauing of progress in people from a free school meal background progressing into higher education, Atherton said, amid increased awareness of the cost of university and questions over whether it will pay off in terms of career prospects.

This softening in demand, however, has come at a time when fees have been falling in real terms, pointed out Nick Hillman, director of the Higher Education Policy Institute, who helped design the current system as a Conservative government adviser, which suggested “no direct link between small fee changes and levels of demand”.

“I’m probably in a minority on this, but I think it makes no difference whatsoever,” Hillman added on what impact crossing the £10,000 barrier could have.

“You don’t pay the fees upfront – generally – but rather with a loan, and young people are not stupid: they know the value of money changes over time. If your meal deal, train fare and rent go up, then of course it’s likely fees will go up, and whether they’re £9,999 or £10,001 is no reason to miss out on bettering yourself through higher education.”

However, if fee rises are to become commonplace, most people agree that this places a heightened duty on universities to deliver a better experience for their students, something that is far from certain given that financial pressures will remain.

And London Economics’ Conlon felt that there would also be more of a responsibility on universities to explain where the fee goes and the changes in cost base that have made it necessary.

For Atherton, passing £10,000 should focus minds again on increasing access, with more investment in widening participation programmes and careers advice.

tom.williams@timeshighereducation.com