The Government now only pays for a sixth of the cost of undergraduate degrees in England, a new report has found.

New analysis from the consultancy London Economics shows the estimated state contribution has reduced from 48 per cent of the total in 2012-13 to just 16 per cent in 2024-25.

Students and graduates are now expected to cover the remaining 84 per cent, up from 52 per cent 12 years previously, the report said.

The study was produced for Universities UK, which represents vice chancellors.

Government contribution was defined as direct funding, including teaching grants, as well as estimated costs absorbed by the Exchequer from loans being wiped in the future.

All loans that remain unpaid are cancelled after 30 or 40 years, depending on which plan a student is on.

The data comes amid a row over student finance in England, with Education Secretary Lucy Powell under pressure to U-turn on a Labour policy to change the terms of Plan 2 loans.

Vivienne Stern, chief executive of Universities UK, said: 'This analysis shows that, over time, successive governments have been shifting more and more of the cost of getting a degree onto graduates.

'When the fee system was introduced, it was designed to be a co-payment model.

'We need a reset, which recognises that we all benefit when a student studies for a degree.

'The Treasury makes a profit on investing in graduates because of the higher tax and national insurance contributions they make, and society benefits from graduates staffing public services and driving economic growth.'

Lewis Wilson, National Union of Students England vice president, said: 'Silently, the burden of a degree has shifted from the Government to the graduate over several decades and successive changes to the student loans system. 

'Our graduates are our teachers, our nurses, our engineers; who are now repaying mortgage sized debts to serve our country. 

'This doesn't sit well for me and my generation, and we need this balance to be shifted, for the Government to see degrees as an investment in our country.' 

The report was published on the same day as a separate study from the Organisation for Economic Co-operation and Development (OECD).

This found the UK as a whole significantly reduced state funding per university student in recent years – in contrast to most other countries.

The OECD's report only examined direct government funding to universities, and did not include money written off at the end of loan terms. Its analysis included undergraduate, master's and doctoral level students.

The figures showed an 8.8 per cent decrease in government spending on students in the UK between 2015 and 2023.

The only countries reducing their spending more in that period were Finland, by 15 per cent, and Bulgaria, by 28.7 per cent.

Meanwhile, across the 34 countries included in the study, state spending on students increased by an average of 10.2 per cent.

Of those, 21 counties increased their spending, while four reduced their spending by less than 2 per cent.

It comes after the former chancellor Rachel Reeves announced in her autumn Budget last year that the earnings threshold for repayment of Plan 2 loans would be frozen for three years from 2027 at £29,385.

It means more low-earners will be dragged into payments, while higher earners will pay more because the threshold will not rise in line with earnings.

Since taking up her role, Ms Powell has said she wants to make sure the student loans system is 'fair' and that the issue is at the top of her in-tray.

A Department for Education spokesman said: 'We're backing our world-class university sector to continue to deliver high-quality courses and experiences for students: we've raised the cap on tuition fees in line with forecast inflation, and provide significant additional funding for higher-cost subjects and to address skills shortages.

'This is balanced with taking decisive action to improve the student finance system and break down barriers to accessing university, including increasing maximum maintenance loan support and reintroducing targeted maintenance grants.

'The costs of higher education must be shared fairly and sustainably between students, graduates and taxpayers, whilst also supporting a financially sustainable higher education sector.'