Richard Walker shines his spotlight on the higher education sector in the UK, and explains why strategic insight is more important than ever – including four specific priorities for 2025/2026.
The “perfect storm” within Higher Education just got fiercer. University marketers have proven their resilience. Over the past few years, they’ve steered their institutions through Brexit, a global pandemic, digital transformation, a cost-of-living crisis and an increasingly sceptical domestic audience. These storm winds continue to blow hard, and it’s only getting breezier out there. The latest existential threat being the tightening of immigration rules, banning many international postgraduate students from bringing dependents to the UK, on top of a reduction in the Graduate Route visa length from two years to 18 months and stricter compliance checks for universities sponsoring students. For many universities, especially those heavily reliant on overseas income, this feels less like weathering a storm and more like being asked to row through it with one oar and a hole in the boat.
A perfect storm of issues for Universities
The UK HE sector is dealing with a lot right now. Let’s use this as a chance to take stock and reflect of the top ten challenges facing the sector – it might prove cathartic seeing everything in one place!
1. Declining Real-Term Funding for Domestic Students. The £9,250 tuition fee cap has been frozen since 2017-2018, leading to a 20–25% real-terms cut in income per student due to inflation and rising operational costs. This is a pressing issue for all, but particularly many of the “post-92” institutions who are more reliant on domestic undergraduates and often have fewer international students or research grants to offset the shortfall.
2. Volatility in International Student Recruitment. However, as outlined earlier, the tightening of visa and immigration rules, especially restrictions on postgraduate dependents, will likely continue to impact on international PG applications in particular.
3. Market over-supply. The competition among universities to attract students can be fierce, especially for popular courses. The struggle to fill places isn’t new for some institutions. For some others, particularly the “top” highly selective universities, there is continued high demand. Many may not have traditionally participated in clearing at all. Even amongst the Russel Group, however, competition is now biting hard and more widely. A 2024 Press Association survey published by the Guardian showed thousands of unfilled places amongst members of the Russell Group– “advertising nearly 3,900 vacancies on courses for domestic undergraduates starting in autumn, compared with 2,000 at the same point the previous year.”
Added to this, population statistics show a plateauing of the 18-year-old population until 2030. Supply will likely outstrip demand and it’s likely there’ll be more university places than the number of students to fill them for several years yet.
4. Lack of Differentiation. The challenges of competition and over supply hit harder given the lack of perceived differentiation that exists within the market. Many universities offer similar-sounding courses and struggle to differentiate their brand and proposition. Most Universities talk about the same things – the teaching, the reputation, the employability, the student experience. Very few have memorable propositions.
5. Perceived Lack of Value for Money. In spite of the freeze on fees for domestic students, there is evidence of students / prospective students increasingly questioning the ROI of a degree—especially when they perceive taught hours as being low or outcomes uncertain. The “post-92s” often serve more cost-sensitive and commuting students, who are acutely aware of debt. Meanwhile, the Russell Group face scrutiny for the extent to which the high prestige equates to high teaching quality.
6. Cost of Living Crisis and Student Poverty. The cost-of-living crisis coincided with a significant dip in the percentage of adult learners saying they would be considering pursuing higher education. In Mustard’s 2022 cost-of-living survey, just 8% of UK adults said they were considering studying for a HE qualification—down from 16% just three years prior. The rising costs for rent, transport, and food are pushing many students into hardship—with direct impact on admissions, attendance and retention.
7. Mental Health and Student Wellbeing. Not only are there challenges in recruitment and admissions, but the lived student experience remains firmly in the spotlight. Student mental health issues are at an all-time high. In the 2024 NSS, only 41% felt their institution supported their wellbeing effectively. Again, this is likely more pressing for post-92 universities whose student populations often include financially stressed students, groups more vulnerable to wellbeing issues. Just last week an article published on BBC News focused on students feeling let down by mental health support, with “the number of students with a mental health condition quadrupling in the decade to 2023-24”.
8. Staff Recruitment and Retention Challenges. Several institutions have come under the spotlight recently for sweeping redundancies across academic roles and professional services. This has coincided with strike action related to pay disputes, pension reform (USS) and workload. The consensus being that, across the sector, morale is low. This is a huge issue given the efforts that will be required from all of this within Higher Education to weather the storm and address the challenges.
9. Research Funding Pressures. This adds to the aforementioned challenges for Universities, placing more pressure on its academics, and further damaging staff morale. UKRI and REF funding are both increasingly competitive, leaving the UK’s universities to jostle in the battle to maintain world-leading status in their specialist fields.
10. Adapting to Digital Transformation. A challenge being faced across sectors, but particularly Higher Education. Since Covid there are higher expectations for hybrid learning, digital support, and edtech-enabled services. The investment to enable this is significant when money’s tight. Many universities still need to modernise their large, often outdated systems and may also have to overcome internal resistance from some of their research-focused academics.
None of this is news to anyone working in Higher Education. But what IS new is the speed with which these challenges and issues are converging—and the strategic nimbleness required to survive them. From our experience, some of these big ships don’t turn especially quickly.
What are the priorities for Universities?
Given all the challenges the sector is facing, what are the priorities to address? Here are FOUR things we believe you should be thinking about right now.
Universities need to commit to change
Firstly, secure that buy in for change. You need to adapt and evolve faster than the competition who are facing exactly the same challenges. Reverting to the storm analogy, now is NOT the time to wait for the calmer waters. It’s time to batten down the hatches – and get smart with your navigation.
You need insight – but you also need the commitment from within to act on it.
Commit to change, and adapt to survive. The last 5 years have been a wake-up call. The next 5 could be even tougher. But the institutions that will thrive are those that are honest about their offer (in terms of strengths and weaknesses), curious about opportunities and brave enough to evolve. You will likely need to have some hard conversations.
Universities need to close the experience gap
The 2024 National Student Survey found that only 52% said their course represented good value for money. Even the best recruitment strategy won’t fix churn if these attitudes and experiences persist. The NSS has seen satisfaction scores stagnate or fall in key areas like mental wellbeing, course support and value for money. The fact is many students feel short-changed.
Universities need insight into what’s really going on. Where is the experience falling short? When does dissatisfaction start to creep in? What support is missing—or coming too late? Mustard’s work across the student journey – from moving in to moving out, – shows that fixing the experience isn’t about flashy wellbeing apps. It’s about listening to what matters and acting on it quickly.
Insight is central to ensuring your institution is genuinely student-centred, not just in words, but in action. Strong reputations in areas such as experience and wellbeing will count for a LOT amongst future cohorts. Prioritise and invest in getting the experience right for longer term success.
Universities need to understand what they stand for and how they can differentiate
Differentiation matters more than ever. One consistent theme in Mustard’s work in Higher Education is that universities often struggle to articulate a unique, compelling and believable value proposition. In a landscape where 150+ institutions are all saying broadly similar things – “world-class research”, “career-ready graduates”, “a vibrant student experience” – it’s no surprise that students are starting to zone out.
That’s why brand research and stakeholder engagement are more important than ever. Universities need to know what makes them different, not just from their neighbours but from online alternatives, global providers and alternative career paths. In a time of reduced domestic demand and international uncertainty, being meaningfully different isn’t a luxury, it’s a lifeline.
Back in 2019, Mustard collaborated with Definition Group on a brand repositioning for The University of Leicester. It’s “Citizens of Change” brand identity was thoroughly researched. It achieved both internal and external goals across branding, engagement, strategy, and social impact – with over 327 million media impressions in five months including national coverage on BBC Breakfast, MailOnline, FT, Times, and Daily Telegraph. The University’s recruitment campaign—“What do you want to change?”—which dovetailed with the Citizens of Change messaging, won Gold in the Best Student Recruitment Campaign category at the 2022 Heist Awards. In September 2024, Leicester was officially crowned Daily Mail University of the Year 2025, with judges praising the “Citizens of Change” scholarships and Leicester was also shortlisted for The Times and The Sunday Times University of the Year 2025.
Universities need to know their segments, not just their stats
Aligned to the questions of “what do we stand for?” and “what makes us different?”, Universities also need to truly understand “who are we for”? “Who are our lowest-hanging fruit”, and “where are they”?
The student market is no longer homogenous, or stable. As the rules of engagement change, so do the audiences. The domestic UG audience is smaller, more price-conscious, and arguably more anxious about the ROI of a degree. International PG students are reassessing the UK as a destination, and those who still come are more likely to be solo, time-poor and outcomes-focused.
The old assumptions don’t hold. You can’t just dust off a three-year-old prospectus or refresh a persona that was based on pre-pandemic qualitative research.
Segmentation is an obvious solution, but this needs to be rooted in real insight.
At Mustard, we conduct bespoke segmentation research to identify target audiences, understand their needs and motivations, and refine marketing strategy across UG, PG, domestic and international segments.
Mustard partnered with the University of Hull to help develop their student segments through deep qualitative research, helping our client to adopt a credible, segment-tailored strategic position, enhancing their ability to meet diverse Gen Z needs and better serving their student community. That said, Gen Z have “been” and will soon be “gone”. Generation Alpha are now aged up to 14 and are already considering their options. What are their mindsets, motivations, triggers and barriers? Who is still considering us and why? What are they looking for? What’s stopping them? What does a “best in class experience” mean to them in 2025?
Finally, what does this mean for research and insights?
I hate the saying “do more with less” – but in this instance it has to be a mantra of sorts. Find cost effective ways to learn more, and accept you will need to prioritise.
We believe the first priority, given the current climate, are the “always on” methods that allow you to get regular feedback – be that on brand, program / curricula design, student experience, etc. This is a great way of getting the “customer” to the heart of all key decisions from the start. What are students really looking for in 2025 and 2026? We have supported programme development through quantitative and qualitative research—identifying gaps, assessing competitor offers, and testing new course concepts across multiple geographies. We have also delivered multiple studies to measure the student experience at various touchpoints and we can reveal the pain points and missed opportunities that affect student success and retention.
Secondly, you need to listen widely – not just to students, prospects and staff – but also parents, employers, academic peers, teachers, career advisors, and international cohorts. Engage with some new audiences and you’ll likely hear something different (and potentially more insightful and impactful).
Thirdly, ask the big question – what does our brand really stand for? When every university claims to deliver “employability,” “a supportive community” and “world-class teaching,” few stand out. Our brand research helps HEIs define and track their distinctiveness, ensuring their value proposition is clear, compelling and aligned with what prospective students actually want.
Whether it’s rethinking your brand, revisiting your segmentation or rebooting the experience, we’d be happy to help you navigate the ongoing storm. We’ve worked with universities across the world to sharpen brands, fine-tune offers and understand their students more deeply. If you’d like to chat about how we can help, drop us a line.
Mustard is an award-winning market research agency with deep experience in higher education. We work with universities, business schools and student accommodation providers to deliver insights that drive real change.
