Students are increasingly prioritising value for money when selecting universities, leading to a significant shift in demand towards institutions with higher entry requirements, according to accommodation provider Unite Group.
The trend also sees a growing number of undergraduates opting to live at home to cut costs.
The company noted that the UK’s most prestigious universities are experiencing high demand, while those with lower entry requirements are seeing a decline in acceptances.
A record number of UK 18-year-olds started university in a recent academic year, with a 2 per cent growth in new undergraduates overall.
However, this growth was particularly pronounced at so-called high-tariff universities – those demanding higher qualifications from applicants – where acceptances surged by 7 per cent.
In contrast, low-tariff universities saw a 2 per cent reduction in acceptances, Unite reported.
This reflects a broader change in student attitudes towards higher education, the firm, which houses approximately 68,000 students, explained.
"Students are increasingly selective when choosing where to study, with a growing focus on graduate outcomes and earnings potential as they seek to ensure they achieve value for money from their time at university," Unite stated.
The company highlighted data showing that the average Russell Group student benefits from a lifetime earnings premium of around £350,000 over a non-graduate, a premium that diminishes significantly for lower-ranked courses.
Furthermore, a rising proportion of students attending lower-tariff universities are choosing to live at home rather than in student accommodation to reduce their overall university expenses.
This figure stands at around half for these institutions, compared to just 15 per cent at stronger universities.
The financial burden of higher education has been a contentious issue, with consumer champion Martin Lewis recently branding the student loan system a "nightmare" and a "mess".
His criticism has focused on the controversial Plan 2 loans, where the salary threshold for repayments is set to be frozen for three years following the autumn budget, potentially increasing payments for some graduates.
In response to these market dynamics, Unite Group is taking steps to align more closely with the UK’s strongest universities, including divesting some of its properties.
The company reported an occupancy rate of 95.2 per cent for its accommodation during the current academic year, a slight decrease from 97.5 per cent the previous year.
Chief executive Joe Lister commented: "Growing domestic demand for higher education, improving international mobility and constrained housing supply underpin the long-term prospects for the sector.
“Students continue to place high value on the residential university experience, supporting sustained demand for the high‑quality accommodation and living experience that we provide."
Shares in Unite were down by about 8 per cent on Tuesday morning.
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