Scotland’s independent think tank
Scotland’s independent think tank

How Should Undergraduate Degrees be Funded? 

Reform Scotland, the non-partisan think tank, today calls for a commission to be set up to examine the way the undergraduate degrees are funded in Scotland. The existing cap on student numbers means that while, since 2006, there has been a 56 per cent increase in applicants, there has also been an 84 per cent increase in the number refused entry.

It is increasingly the case that students from the rest of the UK or overseas are accepted on to courses in Scotland, while their Scottish counterparts are denied. 

The call for a commission is part of the think tank’s contribution to a new report by The Higher Education Policy Institute, ‘How Should Undergraduate Degrees be Funded?‘ The full report can be read here.

The report explores a range of potential funding models for undergraduate education, against a backdrop of financial sustainability concerns for higher education institutions across the UK.

The collection also includes contributions from student leaders, leaders of higher education and two former UK Ministers for Universities. Each proposed model has been analysed by London Economics for its economic impact on students, institutions and the public purse.  Polling was undertaken with potential students to understand better how each model might impact application rates, providing a unique window into the minds of those directly impacted by funding decisions.

The report includes research by London Economics which estimates that the average debt held by Scottish students on graduation from Scottish universities is £32,600, with average lifetime repayments of £33,200 and £22,000 for male and female graduates, respectively. This is based on current maintenance grants.

Alison Payne, Research Director of Reform Scotland, said:

“More people want to go to university, but the fiscal arrangement is holding ambition back. Reform Scotland believes that the current funding arrangements are unfair and unsustainable. There needs to be a better balance between the individual graduate and taxpayers, with graduates contributing towards the cost of their tuition through a graduate contribution, to be paid once they earn more than the Scottish average salary. The amount paid would be based on the amount you earn. If a graduate does not gain much financially from going to university, they will repay little or nothing. In addition, given the demographic challenges and skill shortages that Scotland faces, the Scottish government could then look to introduce schemes that cut or scrap payments for graduates who remain in Scotland working in certain sectors for set periods of time.

“We suggest that a commission is set up to examine what the graduate fee should be, and whether it should vary to take account of differences in course costs. The Cubie report’s suggested figure from 25 years ago of £3,000, which would be about £5,500 today, could be used as a starting point for discussion.”

Rose Stephenson, Director of Policy and Advocacy at HEPI, said:

“Higher education institutions across the UK are under financial strain. In England, the cost of higher education is disproportionately borne by graduates, and in Scotland, it is disproportionately borne by the state. This report aims to breathe new life into the debate on university funding, analysing different options, including how the cost of higher education could be split between graduates, the state and employers.”


  1. HEPI was established in 2002 to influence the higher education debate with evidence. We are UK-wide, independent and non-partisan. We are funded by organisations and higher education institutions that wish to support vibrant policy discussions, as well as through our own events. HEPI is a company limited by guarantee and a registered charity.
  • Reform Scotland, a charity registered in Scotland, is a public policy institute which works to promote increased economic prosperity, opportunity for all, and more effective public services. Reform Scotland is independent of political parties and any other organisations. It is funded by donations from private individuals, charitable trusts and corporate organisations. Its Director is Chris Deerin and Alison Payne is the Research Director. Both work closely with the Trustee Board, chaired by Lord McConnell, which meets regularly to review the research and policy programme.