The Financial Crisis in Scottish Universities and Its Impact on Students from Poorer Backgrounds

Scottish universities are grappling with a profound financial crisis that threatens their stability and, by extension, the educational opportunities of their students, particularly those from lower socioeconomic backgrounds. This predicament, driven by declining international student enrolments, stagnant domestic funding, and rising operational costs, has created a fragile fiscal landscape with immediate and longer-term consequences. For Scottish students from poorer households, who rely on higher education as a pathway to social mobility, the unfolding situation risks undermining a system historically designed to promote equity. This narrative explores the financial instability of the sector, its implications for institutional resilience, and its specific effects on these vulnerable learners, culminating in a critical reflection on the future of educational access in Scotland.

The Roots of Financial Instability

The funding model sustaining Scottish universities has long rested on three pillars: government support for Scottish-domiciled students via tuition fees disbursed by the Student Awards Agency Scotland (SAAS) and Scottish Funding Council (SFC) grants, research income, and, increasingly, tuition fees from international students. The latter, paying between £10,000 and £40,000 annually compared to the £1,820 notional fee for Scottish students, have become a linchpin, cross-subsidising domestic teaching and research. Yet, recent data from the Higher Education Statistics Agency (HESA) reveal a 12% drop in international enrolments—from 83,975 in 2022-23 to 73,915 in 2023-24—costing the sector an estimated £150 million (HESA, 2025). This decline, following a peak in 2022-23, exposes the vulnerability of a system overly dependent on this volatile revenue stream.

Compounding this, funding for Scottish undergraduates has remained static at £1,820 per student since 2010, its real value eroded by inflation, whilst operational costs, staff salaries, infrastructure maintenance continue to rise. Institutions like the University of Dundee report deficits of £35 million, and the University of Edinburgh plans £140 million in cuts, with nearly one-fifth of universities now facing deficits compared to surpluses in 2022-23 (HESA, 2025). This financial squeeze sets the stage for a broader reckoning, with varying impacts across the sector and its students.

Short-Term Pressures and Institutional Responses

In the short term (2025-26), the situation is dire. A 25.7% average decline in postgraduate taught international students—driven by UK immigration restrictions (e.g., curbs on dependants), currency fluctuations in markets like Nigeria (9,415 to 5,985 students), and competition from Australia and the US—has left universities scrambling (HESA, 2025). Dundee, for instance, warns of cash depletion by June 2025 without further aid beyond a £22 million government lifeline, whilst Robert Gordon University (RGU) has seen its international cohort nearly halve to 2,365 (Scottish Government, 2025). The Scottish Government attributes part of this to UK policies beyond its control, yet its budget, cut by 0.7% in real terms, limits relief (Universities Scotland, 2025). Universities are thus turning to cost-cutting, Dundee plans 632 redundancies, RGU 135, foreshadowing a leaner sector.

For Scottish students from poorer backgrounds, defined as those from households below the median income (£27,000) or eligible for SAAS bursaries, these measures threaten access and support. Free tuition, a hallmark of Scottish policy, shields them from direct fees. However, reduced institutional capacity may curtail outreach, bursaries, and mentoring—crucial for widening participation. At the University of the Highlands and Islands (UHI), serving deprived rural areas, partners like UHI Moray face liquidity crises, jeopardising further education provision for local students (UHI, 2024). Programme cuts, particularly in less profitable humanities, could further narrow options for those lacking STEM prerequisites, disproportionately affecting the disadvantaged (SFC, 2025).

Longer-Term Uncertainty and Systemic Risks

Beyond 2026, the outlook darkens without reform. The “perilous” reliance on international fees exposes universities to geopolitical shifts and potential graduate visa curbs (Sim, 2024). Universities Scotland predicts “exceptionally difficult decisions”, course closures, mergers, or institutional failures, within three to five years if trends persist (Universities Scotland, 2025). The free tuition model, politically sacrosanct, constrains domestic revenue increases, and proposals to rethink it face resistance, leaving the sector’s £52 billion lifetime economic contribution at risk (Fraser of Allander Institute, 2024).

For poorer students, this portends a potential erosion of educational quality and access. Staff cuts, as at Dundee and UHI (41 voluntary, 13 compulsory redundancies), may raise student-to-staff ratios, reducing guidance vital for those without familial academic support (UHI, 2024). Hardship funds and mental health services—42% of low-income students cite financial stress as a barrier (NUS Scotland, 2024)—could dwindle, increasing dropout risks and thwarting the 2030 equal access target (Scottish Government, 2025). If free tuition falters under fiscal pressure, any cost-sharing would hit these students hardest, deepening inequality.

Vulnerable Institutions and Disadvantaged Students

The universities most at risk, Dundee, RGU, Edinburgh, Glasgow, and Aberdeen, illustrate the stakes. Dundee’s 27% international drop (4,570 to 3,335) and £35 million deficit threaten its 18% SIMD20 (most deprived quintile) students with fewer courses and support (HESA, 2025). RGU’s halved international cohort endangers employability schemes for Aberdeen’s poorer students, whilst Edinburgh’s £140 million cuts may prioritise research over its 15% SIMD20 undergraduates (SFC, 2025). Glasgow (40% overseas students) and Aberdeen (£12 million reserves) face similar pressures, risking regional access if closures occur. By contrast, St Andrews and Abertay, less reliant on international fees, offer some resilience, though sector-wide strain spares few.

Conclusion: A Crossroads for Equity

Scottish universities stand at a pivotal juncture. The short-term crisis imperils institutional survival and student support, whilst the longer-term outlook hinges on escaping overreliance on international revenue and securing a sustainable funding base, a challenge complicated by political and budgetary limits. For Scottish students from poorer backgrounds, the stakes are acute: reduced services, narrowed curricula, and potential threats to free tuition could entrench disadvantage, undermining higher education’s role as an equaliser. The coming years will reveal whether Scotland can preserve its commitment to educational equity, or whether fiscal necessity will reshape a system cherished for its inclusivity, leaving its most vulnerable learners behind.

 

References

• Fraser of Allander Institute (2024). Economic Impact of Scottish Higher Education. Glasgow: University of Strathclyde.
• HESA (2025). Higher Education Student Statistcs: UK, 2023/24. London: Higher Education Statistics Agency.
• NUS Scotland (2024). Student Financial Wellbeing Survey 2024. Edinburgh: National Union of Students Scotland.
• Scottish Funding Council (SFC) (2025). Higher Education Funding Review 2025. Edinburgh: SFC.
• Scottish Government (2025). Budget Statement 2025-26. Edinburgh: Scottish Government Publications.
• Sim, A. (2024). ‘Reimagining University Funding in Scotland: A Call for Reform’, Higher Education Policy Review, 12(3), pp. 45–62.
• UHI (2024). Annual Report and Financial Statements 2023-24. Inverness: University of the Highlands and Islands.
• Universities Scotland (2025). Scottish Universities: Financial Outlook 2025. Edinburgh: Universities Scotland.