Funding

Higher education institutions (HEIs) in Wales receive their funding from a variety of public and private sources. These are summarised in the tables below and described in more detail under the subheadings which follow.

Since the introduction of the revised tuition fee regime for students entering higher education (HE) from 2012, an increasingly large proportion of funding for HEIs comes from tuition fees. Tuition fees were first introduced in the 1998/99 academic year, reflecting UK government policy to create a more sustainable HE funding regime.

In 2016/17, HEIs in the UK received their funding from the following sources:

For Wales, the income figures for 2016/17 were:

*Exchange rate used: €1 = £0.90 16 December 2020.

Source: Higher Education Statistics Agency Limited (2018). Introduction – Finances of Higher Education Providers 2016/17 (Charts 2 and 3 and Tables D, E and F).

The Higher Education Funding Council for Wales (HEFCW) distributes public funding to HEIs through annual grants, which are based on funding allocations determined each year within a policy framework set by government. HEFCW is a Welsh Government sponsored body established under Part II of the Further and Higher Education Act 1992. It regulates fee levels at HEIs, ensures a framework is in place for assessing the quality of higher education and scrutinises HEIs’ performance.

Reform of HEFCW: It is proposed that the HEFCW will be replaced by a new body – the Tertiary Education and Research Commission for Wales. This will be an arm’s length body responsible for all post-16 learning including higher education planning, funding, ensuring quality, financial monitoring, audit, and performance. It will also be the lead funder of research in Wales. The proposed reform follows a 2016 report (the Hazelkorn review), examining the arrangements for the oversight of post-compulsory education and training, and two consultations about the proposed Commission, which ran in 2017 and 2018. The second of these ran until July 2018, following which the Welsh Government published a summary of all the responses it received. It is taking these into account as the policy and legislative processes for establishing the Commission progress.

While teaching is funded through teaching grants from HEFCW along with tuition fees, research is funded through:

• HEFCW grant funding to support the research infrastructure and enable institutions to undertake research of their choosing, described under the subheading ‘Funding body grants for teaching and research’ below;
• funding for specific research projects and programmes provided by the UK Research and Innovation (UKRI) Research Councils, which is described under the subheading ‘Research grants and contracts’.

European programmes such as Horizon 2020 and funds such as the European Regional Development Fund have been a significant source of research funds in Wales. For example, the predecessor EU programme to Horizon 2020, the Framework Programme for Research (FP7, 2007-2013), provided an additional 15% on top of the UK Government’s own science and research budget. This will cease at the end of the UK EU exit transition period in January 2021.

Tuition fees and education contracts 

Tuition fees make a large contribution to each higher education institution’s income. The limit (‘cap’) on undergraduate tuition fees charged by Welsh institutions to new students was raised to £9000 (€9960.49*) per year in 2012/13. Students do not have to pay this fee in advance and, since 2018/19, have had access to a tuition fee loan to cover the full fee. This replaces the previous tuition fee grant and loan system and is part of the reforms to higher education funding being implemented following the Diamond review. The loan is paid directly to the institution by the Student Loans Company (SLC).

The Diamond review of higher education funding recommended:

• a shift from support with tuition fees through the tuition fee grant to a loans system for tuition fees; 
• more help with living costs – through the introduction of a universal maintenance grant and additional means-tested (income-assessed) grants. 

The aim is to ensure that the higher education funding system is sustainable in the long term and supports students who might be deterred from entering higher education because of the living costs while studying. For further information on the operation of tuition fees, see the subheading ‘Fees within public higher education' below.

*Exchange rate used: €1 = £0.90, 16 December 2020.

Funding body grants for teaching and research 

Public funding to universities and other institutions which provide higher education is distributed on the Welsh Government’s behalf via grants from the Higher Education Funding Council for Wales (HEFCW). HEFCW divides the government funding it receives into money for teaching, research and related activities. It determines the methodology for distributing this funding within the policy framework for higher education set by the Welsh Government in its annual remit letter to HEFCW. For 2019/20, these include to:

• continue to prioritise funding for the ‘expensive subjects premium’ (to support courses in medicine, dentistry and the performing arts) and plan for its expansion and enhancement for full-time and part-time study;
• consider how additional grant support can be provided to students aged 60 and over who want to study postgraduateMaster’s courses;
• consider whether the arrangements to provide accurate information and guidance to students need strengthening to enable them to make informed choices about their future personal development and learning;
• identify opportunities for higher education which directly reflect the needs of the regions across Wales;
• continue to support and encourage institutions to respond to the Talented Women for a Successful Wales report, which focused on the education, recruitment, retention and promotion of women in STEM (science, technology, engineering, and mathematics);
• promote further university-school engagement;
• continue to prioritise safeguarding and wellbeing activity for students and staff;
• continue to work with higher education institutions (HEIs) to increase their civic engagement and leadership. 

Allocation of annual, recurrent grant

HEFCW allocates most of its annual recurrent grant funding – for teaching and research – by formula, using different formulae for each. HEIs receive most of this core funding as a block grant, which they are free to spend according to their own priorities, as long as it is used to support teaching, research and related activities.

HEFCW notifies institutions of their recurrent funding allocations for the coming academic year every spring. Institutions directly funded by HEFCW include universities and some further education (FE) colleges providing higher education (HE) courses.

Recurrent funding for teaching

Reforms of higher education financing mean that institutions’ income for teaching increasingly comes from students’ tuition fees and to a much lesser extent through HEFCW grant. There is no core HEFCW grant funding to higher education institutions (HEIs) for full-time undergraduate teaching in most subjects, or for full- or part-time postgraduate taught courses. HEFCW does, though, pay HEIs a small, per capita amount per student to recognise the fixed costs associated with all students (e.g. enrolment, student records etc.).

HEFCW funding for teaching focuses on priority areas such as high-cost subjects (the ‘expensive subjects premium, ESP’) and strategically important (priority) subjects; supporting disabled students; supporting access and retention; supporting Welsh-medium provision; and supporting part-time undergraduate teaching. HEIs receive HEFCW funding for teaching part-time undergraduate students on the basis of a formula which takes account of the level, mode and subject of study. HEFCW also provides funding in support of medical education (the initial training of doctors) in HEIs in Wales and in support of a range of other courses in subjects and professions allied to medicine.

Recurrent funding for research

Public funds for research are provided to HEIs under a system known as ‘dual support’. Under this system, they are supported by funds from HEFCW, and by funds from the UK Research and Innovation (UKRI) Research Councils, who provide funding for specific programmes and projects. See the subheading ‘Research grants and contracts’ below for further information on Research Council funding.

The recurrent public funding for research distributed by HEFCW aims to contribute to supporting the research infrastructure and to ensure that HEIs have the capacity to undertake high-quality innovative research. Funds are not allocated to any specific activity but may:

• contribute towards the cost of salaries for permanent academic staff, premises, libraries or central computing;
• support fundamental and ‘blue skies’ research;
• contribute to the cost of training new researchers. 

HEFCW funding is targeted where research quality is highest through the ‘Quality Research (QR)’ funding stream, which distributes funding based on:

• the quality of research;
• the volume of research (based on numbers of research-active staff);
• the relative costs of different types of research in different subject areas (reflecting, for example, the fact that laboratory-based research is more expensive than library-based research).

There are also separate calculations to reflect research outputs, environment and impact.

The method used to assess quality is the UK-wide Research Excellence Framework (REF), a metrics-based framework which provides accountability for public investment in research. Submitted research is peer-reviewed by a series of panels comprising UK and international experts and external users of research. The REF operated for the first time in 2014 and has been used to inform funding allocations since 2015/16. The next UK-wide REF will take place in 2021.

HEFCW also:

• distributes research capital funding to HEIs, which can only be used as capital and exclusively for the purposes of supporting the development of the physical infrastructure associated with research;
• provides funding to HEIs to support the training of postgraduate research students (this Postgraduate Research Funding (PGR) is a separate funding stream).

Detailed information on the funding mechanisms for supporting teaching and research is available from the HEFCW website.

Review of government-funded research: In April 2017, the Welsh Government commissioned a review of government-funded research in Wales. The review, which examined the strengths and gaps in research and innovation activity in Wales, and future potential to sustain and grow strong research and innovation, was published in June 2018. It included three key recommendations for the Welsh Government:

1. increasing the visibility and influence of Welsh research, by creating a new Welsh Research and Innovation London Office (WRILO) to increase Welsh contributions to UK-wide decisions about opportunities for research and innovation, following Brexit;
2. strengthening the Welsh research base and enabling Welsh researchers to attract a greater share of UK-wide funding, by maintaining QR funding and creating a ‘Future Wales Fund’, aimed at incentivising Welsh researchers to win funding from outside of Wales;
3. increasing the visibility, coherence and impact of research and innovation in Wales by creating a single overarching brand for innovation activities: the St David’s Investment Fund.

The Welsh Government has accepted the report’s recommendations. It is considering how they can be implemented alongside the responses to the consultation on the proposed Tertiary Education and Research Commission for Wales. 

Research grants and contracts 

The direct costs of specific research projects, plus a fixed percentage to cover indirect costs, are funded by the UK Research Councils, which, since the passing of the Higher Education and Research Act 2017, form part of UK Research and Innovation (UKRI). Funds are awarded on the basis of applications made by individual researchers, which are subject to independent, expert peer review. The seven UK Research Councils are:

• the Arts and Humanities Research Council (AHRC)
• the Biotechnology and Biological Sciences Research Council (BBSRC)
• the Economic and Social Research Council (ESRC) 
• the Engineering and Physical Sciences Research Council (EPSRC)
• the Medical Research Council (MRC) 
• the Natural Environment Research Council (NERC)
• the Science and Technology Facilities Council (STFC). 

The majority of the combined budget for the Research Councils comes from the UK Government's science budget, which is administered through the Department for Business, Energy and Industrial Strategy (BEIS). Some Research Councils also receive income from other UK government departments, from commercialisation of research, and from other research funders. UKRI and the Research Councils are accountable to the UK Parliament for their activities and finances.

Higher education institutions can also receive direct funding from organisations such as Health and Care Research Wales (for health and social care research), and research and innovation funding from the European Union (EU). Welsh Higher Education Brussels (WHEB) supports the higher education sector in Wales to engage with Horizon 2020, the EU research and innovation programme for 2014-2020.

Other income / endowment and investment income 

Higher education institutions (HEIs) also receive income from services provided for students (such as residences and catering); through providing conference services; through endowments or charitable donations; via sponsorship; or from obtaining commissions for research projects from government departments and agencies, or industrial or commercial firms. The relative importance of these other income streams varies from institution to institution. Many HEIs have established separate companies to market their services, with profits covenanted back to the institution.

In diversifying their income streams, HEIs can also encourage voluntary giving. In 2012, the former Higher Education Funding Council for England (HEFCE) published a Review of Philanthropy in UK Higher Education, which highlighted the success of universities and colleges in attracting philanthropic gifts from a diverse range of donors. All fundraising activity must follow the Code of Fundraising Practice established by the Fundraising Regulator.

Financial autonomy and control 

Higher education institutions (HEIs) which meet the conditions to receive funding from the Higher Education Funding Council for Wales (HEFCW) are self-governing, autonomous institutions. They manage their staff, operational resources and infrastructure and have the power to decide how to spend HEFCW block grants, tuition fees and other streams of income according to their own priorities. They are, though, bound by the broad purposes defined by Section 65 of the Further and Higher Education Act 1992. These purposes are:

• providing education and undertaking research;
• providing facilities and undertaking activities that the HEI’s governing body thinks are necessary or desirable for providing education or undertaking research.

HEFCW has a memorandum of assurance and accountability with each university. This sets out the terms and conditions for payment of public funding in the form of HEFCW grants. It reflects HEFCW’s responsibility to provide assurances to the Welsh Government that:

• funds provided are being used for the purposes for which they were given and in ways that comply with the conditions attached to them;
• institutions have appropriate arrangements in place for internal control and governance (including financial management and reporting);
• value for money is being achieved.

This memorandum of assurance and accountability is in two parts. The first part sets out terms and conditions of grant that apply in common to all HEIs; the second part, known as the ‘funding agreement’, is issued annually and gives conditions specific to each HEI.

Where courses of higher education are provided in further education (FE) colleges, this is usually through franchise arrangements, where the FE college works in partnership with an HEI. Although courses are provided in the college, students are registered with the HEI and the HEI receives the HEFCW funding and provides support and quality assurance. The small number of FE colleges that are directly funded by HEFCW to provide higher education courses are also expected to have a strong relationship with a university for the purposes of quality assurance and support.

HEFCW’s regulatory powers were enhanced through the introduction of the Higher Education (Wales) Act 2015. Additional powers introduced under the Act included that of developing a Financial Management Code relating to the organisation and management of the financial affairs of the institutions regulated by HEFCW. The Code, which took effect from 1 August 2017, aims to ensure that institutions are well-run, have effective financial management arrangements and are sustainable for the future.

Fees within public higher education 

This section covers those tuition fees which are regulated by government, i.e. fees charged to full-time and part-time undergraduate home and EU students. Undergraduate students are those in first cycle higher education e.g. studying for a bachelor's degree, or short-cycle programmes such as foundation degrees and Higher National Diplomas.

Fees charged to non-EU/EEA overseas students are not regulated and are determined by the institution.

Undergraduate (first cycle) tuition fees 

Tuition fees for full-time undergraduate students are set by individual institutions. Since the 2012/13 academic year, institutions in Wales have been able to charge a maximum of £9000 (€9960.49*) per year. These fees apply to UK and EU students. Typical fees charged at universities in Wales (and across the rest of the UK) in the 2019/20 academic year are provided in this survey.

Students are not required to pay tuition fees in advance and, since 2018/19, have been able to apply for a fee loan to cover the full fee. Those who began their studies before 2018/19 were able to apply for a combination of tuition fee loan and tuition fee grant which, when combined, covered the full cost of their tuition. The tuition fee grant is no longer available.

Students who apply for loans have their tuition fees paid direct to the higher education institution (HEI) at which they will be studying. See the subheading ‘Financial support for learners’ below for further information.

Any institution that wants its full-time undergraduate courses to be eligible for student support (through student loans) and to charge the maximum tuition fee of £9000, must submit a fee and access plan to the Higher Education Funding Council for Wales (HEFCW). Fee and access plans must be made on an annual basis and must detail the measures that HEIs have put in place to improve access, equality and student retention. They must also set out, for each HEI, information on fee levels, total anticipated fee income, and the intended total fee amount to be invested in the promotion of higher education and in equality of opportunity in higher education. HEFCW publishes guidance on fee and access plans for institutions and makes the approved plans publicly available.

For part-time undergraduate students, fees are similarly set by institutions; there is no fee limit. Part-time students studying in Wales can apply for a tuition fee loan of up to £2625 (€2905.14*).

Note: The UK Government has introduced a Teaching Excellence and Student Outcomes Framework (TEF) to recognise and reward excellent teaching and learning in higher education. HEIs in Wales are able to opt into the TEF, which aims to provide clear information to students about where the best provision can be found and to drive up the standard of teaching in HEIs. While in England performance on the TEF is linked to the level of fees that HEIs may charge students, this is not the case in Wales. Further information on the TEF is provided on the Office for Students (OfS) website.

Historical note: Under the Teaching and Higher Education Act 1998, full-time undergraduate students beginning a course in the academic year 1998/99 were required for the first time to pay tuition fees. The National Assembly for Wales took on responsibility for the tuition fee regime in Wales from 2006/07, under the Higher Education Act 2004. Variable tuition fees were introduced in the 2007/08 academic year and, since September 2012, HEIs in Wales have been able to charge a maximum fee for full-time undergraduate courses of £9000 (€9960.49*) per year, subject to meeting the conditions outlined above.

*Exchange rate used: €1 = £0.90, 16 December 2020.

Postgraduate (second and third cycle) tuition fees 

Fees charged for postgraduate courses, both taught and research, are unregulated and determined by each institution. They vary widely for taught courses.

When setting fees for postgraduate research students, institutions tend to follow the indicative fee level set by UK Research and Innovation (UKRI), which for 2020/21 is £4407 (€4877.32*) for full-time postgraduate students. For part-time research students the fees charged are more variable, depending on factors such as the field of study and intensity of study.

*Exchange rate used: €1 = £0.90, 16 December 2020.

Financial support for learners’ families 

No financial support is available to families whose children attend a higher education institution (HEI). However, the financial position of the family has an impact on the financial support available to the learner. See the subheading ‘Financial support for learners’ below for further information.  

Financial support for learners 

Financial support for undergraduate (first cycle) students 

The information provided under this subheading applies to Welsh students studying in Wales. Arrangements may differ for students who live in one part of the UK and study in another part.

Responsibility for undergraduate student support lies with the National Assembly for Wales, and student loans and grants are administered by the Student Loans Company (SLC). This is an executive non-departmental public body (NDPB) which provides financial services to students in all four education systems of the UK. The SLC service for students in Wales is Student Finance Wales, which assesses eligibility for student loans and grants, pays tuition fees direct to universities and collects loan repayments. Support for new undergraduate higher education students in 2020/21 includes:

• a tuition fee loan to cover the full cost of tuition fees;
• maintenance grants and maintenance loans to cover the cost of living expenses;
• bursaries and scholarships from universities and colleges;
• other forms of support for students with particular needs.

The subheadings which follow provide further information.

Tuition fee loan 

The tuition fee loan is a non-income assessed loan available to both full-time and part-time undergraduate students. Full-time students are entitled to a maximum loan of £9000 (€9960.49*), which covers the full cost of their tuition fees. Part-time undergraduate students who are studying for at least 25% of their time may receive a tuition fee loan of up to £2625 (€2905.14*). Tuition fee loans are paid directly to the higher education institution (HEI) by the Student Loans Company (SLC).

Full-time students who began their studies before the 2018/19 academic year are entitled to a tuition fee grant of up to £4665 (€5162.85*) towards the cost of their tuition fees. A student on a course charging the maximum annual tuition fee of £9000 (€9960.49*) may receive the fee grant and take out a tuition fee loan of £4335 (€4797.64*) in addition to cover the full cost of their fees. 

Maintenance grants and loans 

Full-time undergraduate students are entitled to the following. 

1. The non-repayable Welsh Government Learning Grant (WGLG) to help pay for their living expenses. The amount of grant received is dependent on household income (i.e. the combined total income of the student and the parents or partner they live with), and whether they are living at home or away from home. Most full-time students get a grant of at least £1000 (€1106.72*).
2. Repayable maintenance loans, which ‘top up’ the WGLG. These help with the cost of accommodation and other living expenses for full-time undergraduate students. The amount students receive is dependent on household income and whether they are living at home or away from home. It is also influenced by the amount of WGLG a student is entitled to.

Part-time undergraduate students are also eligible to receive the WGLG and maintenance loans. The amount they receive depends on the intensity of their course and household income. For further information, see the Student Finance Wales website.

Students who began their studies before 2018/19 may access a mixture of the WGLG and maintenance loan. See the Student Finance Wales website for further information.

*Exchange rate used: €1 = £0.90, 16 December 2020.

Loan repayment 

Repayment arrangements are the same for both tuition fee loans and maintenance loans. The threshold for when borrowers are required to start making repayments depends on when they studied their course. Students who began their studies after September 2012 begin to repay their loans once they are earning over £25,725 (€28553.98*) a year. Any loan remaining after 30 years will be cancelled. Payment is collected through the tax system. Student loans accrue interest from the date they are paid out up until they are repaid in full. Repayments are income-contingent and are set at 9% of earnings above the threshold of £25,725; interest rates are Retail Price Index (RPI) (inflation) plus up to 3% (depending on income).

*Exchange rate used: €1 = £0.90, 16 December 2020.

Other forms of support 

The Special Support Grant (SSG) is targeted at specific groups of students including single parents, disabled students or students in receipt of certain state benefits. It is non-repayable and helps with the cost of books, course equipment and travel. For full-time students, the maximum amount available is £5161 (€5728.56*) per year in 2020/21. Full-time students beginning their studies in 2020/21 may also receive an additional grant (on top of the SSG) in the form of the Welsh Government Learning Grant (WGLG) (see above). Students who started their studies before 2018/19 are entitled either to the WGLG or the SSG, but not both.

Individual higher education institutions (HEIs) may provide discretionary support to some students in the form of non-repayable bursaries, scholarships or awards. These may, for example, be scholarships offered on the basis of academic merit, or bursaries provided for ‘care leavers’ (students who were looked after) etc.

Some institutions also provide support to individual students experiencing financial hardship. These funds may be paid as non-repayable grants or bursaries, or as repayable loans.

Bursaries are also available for students on some undergraduate medical, dental or healthcare courses, and for some approved social work courses.

In addition to these bursaries and scholarships, the following help may also be available.

1. The Parents’ Learning Allowance is an income-assessed grant for students who have additional costs arising from the care of a child whilst studying. The child must be dependent on the student and the grant does not cover childcare costs.
2. The Childcare Grant may reimburse up to 85% of a student’s costs for registered and approved childcare.
3. The Adult Dependants’ Grant (ADG) is an income-assessed grant available to students who have additional costs based on having an adult (aged 18+) who is dependent on them. The student’s income and that of his / her dependants is taken into account.
4. Disabled Students’ Allowances meet a student’s additional costs which arise from studying with a disability, such as non-medical helpers / support workers, specialist equipment, or travel.

Further information is available on the Student finance 2020/21 pages of the Student Finance Wales website.

*Exchange rate used: €1 = £0.90, 16 December 2020.

Financial support for postgraduate (second and third cycle) students 

Postgraduate students beginning a full- or part-time master’s degree in 2020/21 can receive a combination of a grant and loan amounting to a maximum of £17,489 (€19412.27*) to help towards course and living costs throughout their degree. The combination available to students with a household income of £18,370 (€20,821.76*) or under is a grant of £6885 (€7803.91*) and loan of £10,604 (€11,770.12*). Students whose household income is not taken into account, or who have a household income of £59,200 (€65710.22*) or above, may receive a grant of £1000 (€1109.97*) and loan of £16,489 (€18302.30*). Students with a household income of between £18,370 and £59,200 may still apply for financial support; the amount of grant they receive depends on their household income, and the rest of the entitlement they receive is in the form of a loan. Loans for postgraduate master’s students were first introduced in Wales in 2017/18.

Full- and part-time postgraduate students beginning a doctoral course in 2020/21 may apply for a loan of up to £26,445 (€29353.16*). The loan, which was introduced in 2018/19, is not income-dependent. It can help with course fees and living costs and covers the whole of the student’s doctoral study. Postgraduate students are not eligible for this loan if they have received or will receive funding from one of the seven UK Research Councils (see subheading ‘Research Grants and Contracts’ above), or are receiving other forms of bursary or scholarship funding. 

*Exchange rate used: €1 = £0.90, 16 December 2020.

Review of higher education funding and student finance 

A revised system of tuition fee loans and maintenance loans and grants was introduced in Wales in the 2018/19 academic year, following the Diamond review of higher education (HE) funding and student finance. The changes, which reflect a shift from support with tuition fees towards help with living costs, aim to ensure that the HE funding system is sustainable in the long term and that it supports students who might be deterred from entering HE because of living costs incurred whilst studying.

Private education 

There are no private higher education institutions (HEIs) in Wales. 

Article last reviewed December 2020.