Colleges given in-year growth funding ‘guarantee’ for 2026-27

Colleges have been given a “guarantee” that the government will meet the cost of in-year growth in student numbers during the 2026-27 academic year.

The Department for Education said it was announcing the decision today, ahead of new enrolments this month, so colleges can “confidently recruit any young person they have a suitable place for” and help reduce the number of young people not in education, employment or training (NEET).

The commitment marks a change from the past two years, when the DfE funded only three-quarters of colleges’ in-year growth demands after “unprecedented” increases in student numbers.

Usually, the department tells colleges that in-year growth funding is subject to affordability.

But guidance published today said the DfE is “prioritising funding for growth” in 2026-27 and will meet the cost of funding institutions according to its published methodology.

If the number of additional students, or the resulting growth payments, is higher than forecast, the department will “consider how to meet this pressure from other budgets”.

This could include changes to funding rates for 16 to 19 allocations in the 2027-28 academic year.

Education secretary Lucy Powell said she was determined to back government’s “warm words” on further education “with actions”.

“Results day was proof of the vital work colleges are doing, delivering lifechanging learning to hundreds of thousands of young people across the country,” she said.

“With record numbers receiving T Level results this year, it’s clear demand for high-quality technical education is growing fast.

“But for too long, colleges have only heard warm words from government. I am determined to back them with actions. This guarantee means colleges can offer places to every young person who wants one, driving down the number of young people not in education or training, and giving them the skills, experience and confidence to thrive.”

However, the guarantee does not mean colleges will receive full funding for every additional student they enrol, as the DfE’s growth formula only provides funding for part of the additional costs of rapid increases in student numbers.

‘A step in the right direction’

The DfE aims to notify all colleges receiving growth funding by the end of April 2027, with payments beginning in May.

David Hughes, chief executive of the Association of Colleges, welcomed the move, as colleges expect at least 25,000 extra students to enrol this autumn.

“As a sector, we fight for this funding year after year. This year, it feels like we have been listened to, because the position for 2026-27 is that the DfE is guaranteeing to fully fund the formula they use on in-year student numbers above the lagged numbers,” he said.

“It means that colleges will be able to enrol every learner they can support this year ahead, helping thousands more young people to progress in learning that will help them, ultimately, to find work and reduce the risks of even higher NEET numbers.

“We are predicting at least 25,000 extra students to be enrolled in colleges this autumn and for many colleges, this could easily be hundreds of young people.”

But Hughes said today’s announcement “doesn’t go as far” as the association would like because the government “really should be guaranteeing the full funding of every learner, if it is serious about reducing the NEET numbers”.

“However, it is a step in the right direction and very welcome,” he added.

The funding guarantee comes as colleges face pressure on physical capacity. Leaders recently warned that some institutions will be forced to turn students away because they do not have enough space or staff to accommodate rising demand.