Scotland’s higher education sector is facing a pivotal moment, with its most experienced university principal, Sir Anton Muscatelli, sounding the alarm on the urgent need for a comprehensive review of how universities are funded and structured. As Sir Anton prepares to retire this September after 16 years at the helm of the University of Glasgow, his warning arrives at a time when the country’s universities and colleges are grappling with mounting financial pressures, shifting student demographics, and looming questions about their future direction.
Speaking to the BBC ahead of his departure, Sir Anton cautioned against “stumbling from year to year” and called for a bold, strategic plan that could fundamentally reshape the courses offered and the research priorities of Scotland’s universities. Notably, he dismissed the idea of introducing tuition fees for Scottish students, acknowledging that such a move is unlikely to win political support at Holyrood. Instead, he argued, “Scotland needs to work out what it wants from higher education and then decide how to pay for it.”
His call for action comes just before the release of two long-awaited reports from the Scottish Funding Council (SFC), due on September 26, 2025. These reports, delayed since early in the year, are expected to provide the most up-to-date financial data for both universities and further education colleges, reflecting numbers through June 2025. According to analysis seen by the BBC, government funding for these institutions has been squeezed by about 20% in real terms over the past six years—a trend that has placed colleges and universities under significant strain.
The impact of this funding squeeze is already being felt. Further education colleges report having to turn away qualified applicants, with apprenticeship courses oversubscribed. Universities, meanwhile, are limiting the number of places available to Scottish students. In an effort to make ends meet, many institutions increased their recruitment of international students in recent years, using the higher fees paid by overseas students to subsidize the cost of educating Scottish students. However, this strategy is now faltering, as the number of foreign students has begun to decline due to stricter UK immigration rules and increased competition from other countries.
The sector’s vulnerabilities were laid bare earlier this year when Dundee University experienced a severe financial crisis. The university, which had continued to ramp up spending despite a sharp drop in overseas student fee income, was forced to seek a Scottish government bailout exceeding £40 million. The principal of Dundee University admitted incompetence before a Scottish Parliament committee, and several senior board members resigned over the mismanagement. While Dundee’s situation is an outlier, other universities are also feeling the pinch. Edinburgh University, for example, is planning £140 million in cuts—including job losses—with principal Sir Peter Matheson publicly calling for a “radical re-wiring” of the institution to cope with the funding challenge. Recent strikes by academic staff at several universities have further highlighted the impact of these cuts.
So where does the money come from? Scottish students with permanent homes in Scotland do not pay tuition fees. Instead, universities receive government funding for a predetermined number of Scottish students each year. Yet, university leaders argue that the amount they receive falls short of the actual cost of educating these students—and is usually less than the £9,500 a year paid by students from the rest of the UK. International students, on the other hand, pay significantly higher fees, often nearly three times as much as UK students, especially for postgraduate courses. But as noted, this revenue stream is now under threat.
A new study by Professor David Bell, an economist at Stirling University, provides a stark assessment of the funding gap. According to the study, funding per Scottish university student has dropped by 22% in real terms between the 2019-20 and 2023-24 academic years, largely due to inflation. The research reveals that in some subjects, the shortfall is especially acute. For instance, annual funding for modern languages stands at £7,421 per student—about half of what universities say is required. In dentistry, the government paid £19,580 per student in 2024, which is at least £9,000 short of the true cost. Funding for other fields, including veterinary studies, law, social work, media studies, drama, architecture, and several sciences, would need to increase by at least 70% to meet the actual cost of education, according to Professor Bell.
Universities also contend that research funding from government and other sources does not adequately cover the overhead costs associated with maintaining facilities and supporting research staff. This chronic underfunding has forced institutions to rely even more heavily on volatile income from overseas students. The number of foreign students at Scottish universities nearly doubled from 24,200 in 2006-07 to a peak of 47,700 in 2022-23, but has since declined. New immigration rules, which restrict students from bringing their families and reduce the time foreign nationals can work in the UK after graduation, have made Scottish universities less attractive to potential overseas applicants.
The reliance on international students varies widely across institutions. At the University of the West of Scotland and Glasgow Caledonian, about 75% of taught postgraduate places are filled by non-UK students. Older, more prestigious universities such as Glasgow and Edinburgh have more than half of their students coming from overseas. Meanwhile, the number of places available to Scottish students for first degrees remains capped due to government funding constraints. In contrast, there is no cap on students from the rest of the UK, who pay £9,535 in tuition fees for the 2025 academic year—a 3.1% increase from the previous year.
One notable outcome of the Scottish government’s policy of free tuition for local students is that graduates leave university with significantly less debt. The average Scottish graduate in 2023 had debt of £15,430, compared to £44,940 for graduates from the rest of the UK. However, earnings five years after graduation vary dramatically. Professor Bell’s research found that a computing graduate from St Andrews earned an average of £77,000 in the 2021-22 tax year—three times more than an art and design graduate from the University of the Highlands and Islands, who earned £15,300. Graduates in medicine, dentistry, and economics also tended to earn higher-than-average salaries, while those with degrees in media, sociology, and performing arts earned less.
Professor Bell argues that the current funding model, which allocates funds based on the previous year’s budget, leaves little room for innovation or change. Sir Anton Muscatelli agrees, emphasizing the need for universities to differentiate themselves, share resources, operate more efficiently, and even consider mergers where appropriate. As Scotland approaches the 2026 Holyrood election, Sir Anton insists that politicians must recognize the vital role of the education sector in the country’s economic future. He stated, “It really is imperative that we don’t stumble from year to year [but] think about how this is going to be shaped or resourced. We need a strategic plan as a country, which is why I suspect after 2026, there will need to be a look at the shape and size of the Scottish [university] sector. I hope this is done in a rational way. I strongly believe in a publicly-funded sector, I hope that can be achieved, but let’s start with the question: what sector does Scotland need?”
As the sector awaits the findings of the Scottish Funding Council and considers Sir Anton’s parting advice, the future of Scottish higher education hangs in the balance, with critical decisions ahead that will shape the opportunities and challenges for generations to come.
