Britain's new Labour government announced Monday that university tuition fees in England would be increased for the first time in eight years, as higher education institutions grapple with financial deficits.

The 3.1% rise comes as university leaders blame a crackdown on immigration for restricting international student numbers that were already hit by the U.K.'s departure from the European Union.

Education Secretary Bridget Phillipson said a cap on tuition fees for domestic undergraduate students attending English universities would increase by 285 pounds in August 2025 to 9,535 pounds ($12,350).

The cap has been set at 9,250 pounds since 2017.

The amount available in so-called maintenance loans, which help students with general living costs, will also rise by 3.1%.

Phillipson said the new government, elected in July, was taking "the tough decisions to restore stability to higher education."

Labour has blamed the conservative Tory party for leaving it a dire inheritance across various sectors including the economy, health service and prisons.

Last week the center-left party announced tax hikes to raise 40 billion pounds in its first budget in almost 15 years.

University tuition fees were first introduced in Britain by former Prime Minister Tony Blair's Labour government in the late 1990s.

In 2012, the Conservatives tripled the maximum that universities could charge to 9,000 pounds. It then kept the cap at 9,250 pounds for seven years, despite soaring inflation.

Labour's new Prime Minister Keir Starmer had pledged to scrap tuition fees when he ran for the party leadership in 2020.

The devolved administrations in Scotland, Wales and Northern Ireland have policy-making powers over education and set their own tuition rates.

Fears of shortfalls

Universities U.K. (UUK), which represents 141 British higher education institutions, welcomed the increase as "the right thing to do."

"Thriving universities are essential to a thriving U.K.," UUK Chief Executive Vivienne Stern said in a statement.

She called the nearly decade-long freeze in fees "completely unsustainable for both students and universities."

The UUK has warned that all of its members are "feeling the crunch" from restrictions on visas for international students.

They typically pay more in tuition fees than their domestic counterparts and had become a lucrative source of income for many institutions.

But the former Conservative prime minister Rishi Sunak imposed restrictions on overseas student visas, banning many from bringing their families, as part of a crackdown on record levels of immigration.

In the first four months of 2024, there were 30,000 fewer applications from overseas than in the same period in 2023, according to official statistics.

Universities have been warning for months about the effect on their finances, with fears that shortfalls could require them to cancel courses or force some to close altogether.

Sally Mapstone, the president of UUK, told the group's conference in September that the current deficit in the sector was 1.7 billion pounds for teaching and 5 billion pounds for research.

The National Union of Students welcomed the increase in maintenance loans, which it has advocated for years.

But its vice president for higher education, Alex Stanley, demanded an "urgent review" of higher education funding, saying the sector was "in crisis."

"Universities cannot continue to be funded by an ever-increasing burden of debt on students," he said.