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Higher education in Northern Ireland is facing a complex funding dilemma, with the Treasury spending significantly less on Northern Irish students compared to their English counterparts. According to government-published numbers, the concession made by the Exchequer for a home Northern Irish undergraduate is roughly £5,400 over a three-year course, whereas the equivalent for a Plan 5 student in England is between £12,000 and £14,000.

The disparity in funding is largely due to the fact that Northern Ireland has chosen to keep fees and debt low for its students. The tuition fee cap in Northern Ireland is £4,985, compared to £9,790 in England. As a result, Northern Irish students borrow less, with the average annual borrowing standing at around £8,800, compared to £45,600 for English graduates.

The subsidy provided by the government follows the debt, with the state writing down a portion of the loan at the outset. In Northern Ireland, a loan is carried at roughly 79% of its face value, meaning about a fifth of every pound lent is written down. This subsidy is not a grant, but rather the modelled loss on the borrowed money.

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To increase the subsidy, Northern Ireland would need to increase the borrowing, which would require raising fees to English levels. However, this would result in students taking on more debt, which could lead to a harsher repayment regime. The Treasury’s Statement of Funding Policy allows devolved governments to offer “broadly similar terms” for student loans, but with the condition that the scheme costs the same or less than it would under UK government policy.

Northern Ireland could raise fees, increase borrowing, and reduce the direct grant to universities, which would free up public funding for other uses. However, this proposal is not without its trade-offs, as it would require students to take on more debt and could lead to a harsher repayment regime.

Ulster University’s written evidence to the Treasury Committee’s recent loans inquiry makes the case, borrowing Martin Lewis’s framing, that higher fees “won’t change what most pay each year”, because repayment is income-contingent. Only those who would otherwise clear the loan in full – generally higher earners – end up paying more, while median and lower earners simply have more debt written off at the end.

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The review facing Northern Ireland is not a problem with a straightforward solution. Rather, it is a set of trade-offs that cannot all be won at once. There is higher education against everything else, with every pound spent on universities being a pound not spent on health, schools, or infrastructure. There is more debt against more spending on education, with the only way to pull down more Treasury subsidy being to borrow more. There is more debt against worse terms, with lending more potentially tripping the comparability test and resulting in a harsher repayment regime.

Ultimately, the review’s real task is to decide who should bear the costs of the higher education system in Northern Ireland. The low-fee, low-debt settlement is not obviously a bad or good deal for students; it is simply a different deal, with the costs distributed differently. The challenge is to find a sustainable funding model that balances the needs of students, universities, and the wider economy.

It is a complex issue that requires careful consideration of the potential consequences of any changes to the funding model. The region’s universities and students are eagerly awaiting the outcome of the review, hoping that it will provide a solution to the funding crisis that has been affecting them for so long.