We need to talk about money: Are universities actually worth it?

Jan 27

Line image of scales with "Price" on one side and "Value" on the other, superimposed over a photo of a hand holding it up.

This week, two significant and interesting reports hit the world of higher education.

The first is Are universities worth it? A review of the evidence and policy options by David Willetts. The second is the 2025 Student Money and Wellbeing Report by Blackbullion.

One is an intelligent, articulate and well-researched piece, which provides a compelling analysis of the current state of higher education. It concludes that all is fine; media and political hype around the problems with degrees and university funding have got it all wrong, and university and the way it is currently funded is undeniably a good thing.

The other is a report that is barely more sophisticated than a master's dissertation, but manages to press exactly the right buttons, needling its way into finding precisely the financial problems that students face in their daily lives, and how it impacts their studies.

I wonder if you can guess which is which?

Are universities worth it? A review of the evidence and policy options by David Willetts

Lord Willetts, as some of you will be aware, was the Conservative Higher Education Minister in 2010 when the policies were put in place to raise tuition fees from £3,000 to £9,000. I always thought he was an unusual politician; genuinely more interested in his actual brief than in his own career. Universities and Higher Education were absolutely his focus, and the fact that he continues to come back to write about them and support them a full decade after leaving government is a testament to this.

The report is a long read, and well over fifty pages. But if you are interested in a genuine, compelling and well-researched argument for the value that universities provide, both to individuals and the country, then do read it.

His headline conclusions include:

More does not mean worse: Contrary to the current populist view of many politicians, participation in higher education SHOULD grow, and its benefits are not watered down by greater numbers attending university.

It pays to go to university: You’ve all seen the figures a million times, but research continues to show a significant earning premium for graduates over those who could have, but didn’t go to university. And that premium more than covers the costs.

The non-economic returns are just as great as the economic: In terms of physical and mental health, race and gender equality, involvement in voluntary associations and in voting, a university education clearly provides far wider benefits than just income.

He also debunks the myth of widespread “bad” courses, and shatters the illusion that degree apprenticeships are a silver bullet for the future of education and work.

He finishes by tying a bow around the gift of his own funding arrangements; arguing that the amount that students have to pay back after they graduate is a small price to pay for the benefits they receive.

Now, I am not remotely convinced that the funding arrangements he put in place are serving students or the tax-payer well, but I do genuinely recommend that if you are a parent, teacher or adviser, you read the report for its sheer intelligence and weight of argument.

Read the full report here

The bit that Lord Willetts misses out entirely in his report, however, is how those very funding arrangements are causing untold stress and challenges for the students themselves. Thankfully these are driven home loud and clear in the second of this week’s reports.

The 2025 Student Money and Wellbeing Report by Blackbullion

As I hinted in the introduction, I didn’t find this the most satisfactory of reports to read. It doesn’t really flow in places, and the conclusions are sometimes a little clumsy. However, it does shine a light on some significant problems and challenges that students who are studying right now are facing.

First up, students are facing a significant gap between what they perceive they need, and what they actually have financially. And this is not that they have some over-inflated sense of entitlement in terms of lifestyle. Students on average believe they need just £924 per month to live. That’s a conservative amount by any measure. And yet the average funds they tell us they receive, per month are just £559. That’s a £365 a month gap. Enough to cause stress for even the most resilient adult!

Secondly, this gap, and the resulting financial stress, is having an impact on mental health and on academic grades. Nearly 60% of students responding felt that they had achieved a lower grade in an assessment because they were too hungry or too cold to study or concentrate. And a worrying 77% reported that their financial challenges were having a negative impact on their mental health.

Thirdly, and rather surprisingly, the report notes a significant decline in the numbers of students undertaking part-time work over the past two years. Of those who responded, just 45% were doing any kind of work part-time while studying, thus missing out on both the extra income that part-time work brings, and the benefits in terms of skills and employability.

Why might this be? Well, it's hard to speculate, but there could be a connection with the final highlight of the Blackbullion report. In their survey, you see, they found that despite all the challenges, 80% of students were optimistic that the costs of their education will be worthwhile in the future.

So while life for current students is deeply challenging right now, they seem to be happy that it will all be worth it in the end.

Read the full report here

So what are we to make of this all?

I advise confidence in the future, and realism in the now. So…

Have confidence that university is a great option after school

Whether you are a student considering their next steps after school, or are a parent, teacher or adviser, have confidence that for the large majority of students, university will be of significant financial benefit and more. The media, and plenty of politicians on both sides, may be giving universities a hard time at the moment, but for the students themselves, the arguments to go to university are extremely compelling

Focus on financial literacy and a genuine understanding of the student funding system

As we discovered in last year’s Save the Student Student Money Survey, 74% of students wish they had better financial education. So if you are a teacher, parent or adviser it is on you to help them receive it. And don’t think that a one hour talk on student finance and budgeting from the local uni will make them an expert on finance any more than a one hour class on Romeo and Juliet will make them an expert on Shakespeare. You need to do far better than that!

Students: After reading my articles on Fees, Loans and Grants and Setting and Managing your Budget, have a look at what Martin Lewis has to say about student funding at Money Saving Expert. He really has a knack of explaining it in a sensible understandable way!

Be super-realistic on budgets

The likely costs that many universities put on their website are at best out of date, and at worst utterly unrealistic. Even the most reliable data (see that Student Money Survey) will be reporting figures that will be two years out of date by the time today's applicants get to university.

So find the most accurate living costs you can, and remember to add inflation. The Consumer Price Index rate is around 2.5% as I write this, but has been as high at 7% in the last couple of years. This is not insignificant when calculating how much you (or if you are a teacher or parent, then your students, sons and daughters) will need to live.

If you underestimate the financial costs of living as a student and are overly optimistic about making ends meet, the price to pay on grades and mental health could be very real.