Higher Education (Fee Limits and Fee Limit Condition) (England) (Amendment) Regulations 2026

The Government took the immediate action needed and responded by increasing fee caps for the 2025-26 academic year and by also making reforms to the Office for Students. But the Government must go further to ensure that our higher education sector is put on a secure footing, to allow it to face the challenges of the next decade and to ensure that all students receive the world-class education they deserve. Government and the sector have a shared interest in fully realising the benefits of higher education for students, taxpayers, the economy and wider society. Government has a responsibility to ensure that the higher education sector is suitably funded, and the sector has a responsibility to ensure that it delivers the best value for students and maximises its contribution to our economy and society.

This SI is intended to put our higher education sector on a more secure footing and provide greater certainty over future funding, so the sector can focus on delivering quality provision. It will mean that, for the 2026-27 academic year, from 1 August 2026 onwards, tuition fee limits for undergraduate courses will increase by 2.71%, and for the 2027-28 academic year, from 1 August 2027 onwards, by a further 2.68%, in line with forecast inflation, based on the RPIX inflation measure. This means, for example, an increase from £9,535 to £9,790 for a standard full-time undergraduate course in 2026-27, and an increase to £10,050 in 2027-28.

Increasing fees for the next two academic years will mean that providers have greater certainty and can focus on delivering the Government’s ambition for a more specialised and more efficient sector that is better aligned with the needs of the economy. This will provide long-term certainty over future funding for the sector. We will then legislate, when parliamentary time allows, to increase tuition fee caps automatically for future academic years. These annual increases in fees, linked to inflation, will balance the need to give the sector stability with fairness to students and taxpayers.

I understand that this may raise concern about the affordability of higher education for students, but the Government are committed to ensuring that higher education is open to all who have the ability and desire to pursue it. The student finance system removes upfront financial barriers and provides additional support to those with the greatest needs, so that higher education is open to all. The Government are already making improvements to the student finance system that we inherited. To help students from disadvantaged backgrounds progress and excel in higher education, the Government are reintroducing targeted, means-tested maintenance grants of up to £1,000 per year, from academic year 2028-29. The Government have also committed to future-proof our maintenance support offer by increasing loans for living costs with forecast inflation every academic year from 2026-27 onwards.

The OfS has consulted on its future approach to quality. It will continue to hold providers to account for the outcomes that they achieve for their students, and this Government will ensure that only high-performing providers are able to charge the top rate of fees. Eligible students can continue to apply for upfront fee loans to meet the full cost of their tuition.

It is also important to remember that student loans come with a range of unique protections designed to support borrowers throughout the lifetime of the loan. Unlike commercial loans, student loan repayments are calculated solely on a borrower’s earnings, not on the amount borrowed or the rate of interest applied. Any outstanding balance, including interest, is cancelled at the end of the loan term, with no detriment to the borrower, and student debt is never passed on to family members or descendants.

The Government’s ambition is to have a more sustainable, more specialised and more efficient sector, which aligns with the needs of the economy. It is vital that higher education continues to contribute to closing the gap between people from disadvantaged backgrounds and their peers. The Government want to recognise each provider’s unique contribution and encourage them to capitalise on their comparative advantage. The Government are not going to force this specialisation; it is clear that the diversity of the sector is a strength, but each provider needs to be clear on its distinctive role in the system and move away from a one-size-fits-all approach. Each provider needs to be well run, collaborating with others to deliver the best value for students, and to operate as efficiently as possible.

In December, the Government announced reforms to the research excellence framework—the REF—to ensure that it better supports curiosity driven research, government missions, industrial strategy priorities, innovation and commercialisation. It will also reduce administrative burden and encourage greater collaboration and specialisation across universities. At the same time, the Government will protect and grow quality related research funding and redirect some UKRI funding toward areas of strategic national importance, while addressing sustainability challenges in the sector.

To conclude, this SI will put our higher education sector on a more secure footing, enabling it to continue to deliver the world-class higher education that current students and those in future generations deserve. I beg to move.

In that spirit, I ask the Minister three questions. First, what assessment has been made of the impact of these increased fee limits on the participation of students from lower-income backgrounds? Secondly, can the Minister set out whether the Government intend to bring forward a comprehensive review of higher education funding—and, if so, when—rather than continuing with the incremental adjustments? Thirdly, what consideration has been given to increasing maintenance support alongside these fees changes to ensure that students are squeezed no further by the cost of living?

We must not accept a false choice between underfunded universities and overburdened students. By the way, I should declare my interest, as I have done on several occasions previously: my daughter is in the first year of her degree at Sheffield Hallam University, so she may well be impacted by this change.

We are determined to ensure that higher education providers go further in giving their students the best course, making sure that they work individually but with links to employment outcomes and to our industrial strategy, by ensuring that student destinations are a factor in considering providers’ performance. Sir David Behan’s independent review highlighted that, and we are working through the recommendations in supporting institutions to implement a more integrated quality system through the teaching excellence framework. The aim is for a regulatory approach that combines tackling poor quality with a greater focus on driving continuous improvement for all registered providers.

To answer the noble Lord’s concerns, that approach will be proportionate and will reward the highest-quality provision. That was clearly laid out in our Post-16 Education and Skills White Paper. In the future, the Government plan to make fee uplifts conditional on providers achieving a high-quality threshold through the OfS’s new quality regime.

I am also delighted to emphasise that the Government are bringing back maintenance grants and, through maintenance loans, helping undergraduates from the most disadvantaged backgrounds to progress and excel in higher education. The Government will future-proof the maintenance loan offer by increasing loans for living costs in line with forecast inflation every academic year from 2026-27 onwards. I hope that addresses the concerns.

We are ensuring that students from the lowest income families receive the largest year-on-year cash increases in support and providing students with long-term financial certainty on the financial support they receive while studying. Maximum loans will rise by 2.71% across 2026-27. In addition, vulnerable groups of students who are eligible for benefits—such as lone parents, some disabled students and care leavers—are all exceptionally important and we must make sure that we support them. I am delighted that many local authorities, as well as universities and other institutions, are looking at how they can further support disadvantaged students.

The noble Earl, Lord Effingham, raised the issue of repayments. I reassure him that, when it comes to students repaying their loans, their monthly repayments will not increase because of the changes to the fees or maintenance support. Student finance works very differently from standard consumer lending. Repayments are determined solely by a borrower’s income rather than the total amount borrowed or the interest that accrues. Those earning below the repayment threshold will make no payments at all. At the end of the repayment period, any outstanding balance—including any accumulated interest, which I mentioned earlier—will be cancelled in full.

We have to be realistic: we inherited a terrible fiscal situation and some of the decisions we are making are tough but necessary to protect both taxpayers and students. On the question about the review, there is a continuous review into student finance to ensure that it remains fair, sustainable and supportive of students from all backgrounds. I know there is a lot of interest in this area at the moment, so I reassure noble Lords that these matters are constantly under review. I cannot be more specific about where we may go.

I think we have agreement across the Grand Committee that the higher education sector is one of the country’s most valuable strategic assets. We need to protect it on behalf of the institutions themselves, while making sure that future generations of students can continue to benefit from it. The system of course has financial challenges but, despite that, the number of students from disadvantaged backgrounds has not diminished as was feared. That is due, I think, to the extensive work in engaging with them to make sure that they feel that the courses on offer are for them. We know that seven years of frozen fees have contributed to a significant real-terms decline in providers’ incomes. I hope that that addresses the noble Earl’s concerns.

The Government and the sector have a shared interest in fully realising the benefits. The Government have already taken decisive action to boost income, as I have outlined. We of course need to do more. We need to keep reviewing this and making sure that stability runs through this very important sector. However, to be absolutely clear again, the Government continue significantly to subsidise the HE system. In addition to the subsidised fee loans provided to students last year, the Government also provide support to world-leading research. That is why this statutory instrument will increase, for a further two years, the limits on tuition fees that higher education providers can charge students studying undergraduate courses. With those comments, I commend the regulations to the Grand Committee and hope to get approval from other noble Lords.