Colleges face funding squeeze as DfE rations student growth cash again

Colleges and sixth forms in England will once again be forced to absorb the cost of rising student numbers after ministers confirmed they will not fully fund this year’s in-year growth.

The Department for Education said providers taking on additional 16 to 19 learners in 2025-26 will receive only around three-quarters of the funding expected.

This is the same approach the government took last year due to an “unprecedented” number of extra students, with officials citing pressure on budgets as demand continues to grow.

It comes a month after the DfE announced a below-inflation per-student rate rise for the next academic year, with ministers accused of breaking a promise for a real-terms funding increase for 16 to 19-year-olds made in last year’s white paper to ease demographic pressures.

The DfE said today: “There has been another large increase in 16 to 19 funded students this year. This growth is positive for the many young people who have been able to take up opportunities for 16 to 19 education and represents a strong response by the sector.

“However, because of the size and distribution of this growth in student numbers, it does create another year of very high in-year growth. We will fund all students through the lagged student number methodology in future allocations as normal. However, the current growth is significantly above the budget available for in-year payments, and so we cannot fully fund this growth.

“We will provide approximately three-quarters of the funding expected based on arrangements published in August 2025.”

In-year growth provides extra funding to colleges that recruit significantly more students than originally allocated, acting as an exception to lagged funding by offering a partial top-up for additional in-year costs.

The Association of Colleges estimated that colleges are currently teaching around 32,000 unfunded 16 to 19-year-olds due to the demographic bulge.

David Hughes, chief executive of the AoC, said colleges and their students are being “let down once again in today’s announcement by a dysfunctional funding system and a lack of respect which harks back to the dark days of austerity they suffered in the 2010s”.

He told FE Week: “This academic year, colleges recruited 32,000 more 16 to 19-year-old students than they were funded to and did so because they believe in the power of learning to support people in life and in work.

“Today, we learned that the government cannot even find the funding to pay around 50 per cent of the full cost for their courses. Instead, they only have sufficient funding to pay three quarters of their formula, meaning colleges will end up being part-funded at a little over a third of the full cost.”

Hughes added: “The cost of fully funding those 32,000 students would be around £220 million and the DfE formula would probably result in colleges getting half of that, around £110 million.

“But they will now get three quarters of that – around £80 million – meaning they have failed to find £30 million to fully fund their own formula. That suggests these learners and colleges are simply not viewed as high priorities, because no other part of the education system is expected to operate like this.

“At a time when the government is rightly aiming to reduce the numbers of young people not in education, training or employment (NEET), it also makes no sense. College leaders feel that their good will and strong inclusion values have been abused and I worry about what that might mean in future decisions they take when faced with unfunded students.”

Officials acknowledged that the in-year growth decision will be “disappointing” and encouraged colleges that have concerns about the impact of this change to contact their regional officials or the DfE’s customer help centre.

Providers will start to receive growth payments from July.