Funding higher education

The total amount is set by Government each year, and we allocate it between higher education providers, equitably and transparently.

Information on the amount we allocate and how we currently do that is available under Funding and investment and in our publication 'Guide to funding: How HEFCE allocates its funds' (HEFCE 2010/24). From academic year 2012-13 key aspects of the funding system will change; for more details see our information on higher education funding reform.

Most of our budget goes to 130 universities and higher education colleges. We also support higher education courses in 122 directly funded further education colleges.

Our funds support three priorities in higher education:

• learning, teaching and student choice
• research 
• strengthening links with business and the wider community.

We also provide: capital funding for one-off expenditure such as buildings and equipment; funding for related bodies that develop and support higher education; match-funding for charitable donations that institutions receive; and other grants and loans that further our strategic goals for the sector, including sustainability and good governance.

The way we fund higher education reflects our strategy and government policy. Every year we receive a grant letter from the Secretary of State for Business, Innovation and Skills which directs the funding decisions we make.

HEFCE is the largest single source of funding for English higher education, but universities also have a range of other income sources including student fees, their own endowment funds, businesses, other public sector organisations such as the NHS, and various sources of research income including charities and the UK Research Councils.

Page last updated 3 January 2012