Report

Assessing potential manifesto commitments on higher education funding in Wales

This report from UK think tank HEPI publishes modelling on proposed higher education funding reforms in the run up to the Senedd elections.

The Higher Education Policy Institute (HEPI) and London Economics have published modelling on proposed reforms for higher education funding in Wales in the run up to the Senedd elections on 7 May 2026. London Economics was commissioned by HEPI to assess the impact of specific policy options for Welsh political parties ahead of the 2026 Senedd elections, including: keeping Plan 2 student loans (which Wales kept when England moved to Plan 5); reducing maintenance grants for Welsh students studying elsewhere in the UK; and removing loan interest rates and extending the loan repayment period to 45 years.

While it is not possible to know exactly what the different political parties’ manifestos will say yet, these three options are respectively based on the policies of: i) the current Labour administration; ii) documents from Plaid Cymru; and iii) statements by Reform UK. These three political parties have led the opinion polls in Wales for most of the past two years.

The analysis is outlined in a new report, Assessing potential manifesto commitments on higher education funding in Wales, which focuses on the 2025/26 cohort of first-year Welsh-domiciled undergraduate students. The modelling assesses a range of metrics, including spending on student loans; student loan debt on graduation; and expected lifetime loan repayments.

Plaid Cymru’s proposal of lowering maintenance grants for Welsh students who go to study in the rest of the UK would reduce the Exchequer cost of the funding system by £26 million per cohort, and increase the cost for students / graduates studying in the rest of the UK by the same amount.

These students would be worse-off due to the reduction in maintenance grant funding but, post-graduation, only high-income graduates would face increased loan repayments, while low- to middle-income graduates would be unaffected by the proposals.

Under Reform UK’s proposals of abolishing loan interest rates and introducing a 45-year repayment term, the Exchequer costs would increase very substantially, by £322 million per cohort (more than 80% higher than under the current system). The cost to students / graduates would fall by the same sum. This is due to the costly elimination of loan interest rates: the extension of the loan repayment period has little impact, so does not offset the additional costs.

Middle- and high-income graduates would benefit from much lower total repayments; however, low-earning graduates would make slightly total higher repayments.

The new report emphasises that it remains unclear how much practical room for manoeuvre any political party will have after the Senedd elections, as the Welsh Government is constrained in its student support policy by budgetary limits imposed by the UK-wide Treasury. These limits dictate that the cost of student loans in any of the devolved nations, including Wales, should be ‘comparable’ or less than in England, if the costs are to be funded by the UK Government.