By Jamie Warner, Associate Consultant, SUMS
This two-part series explores how behavioural “nudges” – small, lower-cost interventions that guide choices without mandates – can drive both efficiencies and incremental growth across key university processes. From student payments to procurement, nudges offer practical tools to reduce waste, influence positive behaviours, and foster a culture of smart spending.
Explore how this aligns with our SUMS Efficiencies campaign, which is supporting universities to do more with less, through smarter models and better decision-making.
Part One: smarter student payments and budgeting
In this first part of our series, we explore how nudging can help institutions improve income collection and budgeting discipline – two core areas with big efficiency potential.
A financial blizzard in HE
With funding freezes biting and talk of “material risk of closure” echoing down the halls of academia, Britain’s universities are facing a sobering budgetary gloom. For most, reliance on international student fees has proven challenging, with the OfS warning that 72% of English institutions expect to run deficits next year. In response, HEIs have been sharpening their axes, with one in four leading UK institutions slashing staff and up to 10,000 job losses on the way. The latest analysis suggests universities in England would need to charge £12,000–£13,000 per student just to cover teaching costs – far above the current £9,535 fee cap. Throw in spiralling costs, visa crackdowns, and a demographic dip, and you have a very real financial storm.
Faced with this cheery backdrop, vice-chancellors and finance directors might be forgiven for cutting ruthlessly and somewhat indiscriminately. The official calls are all for “structural change”, in other words, mergers, radical cuts, or some deus ex machina from Whitehall. But while we wait for this mythical funding model reform, how do senior leaders eke out some stability?
Exploring the art of the nudge
One promising avenue that hasn’t been fully tapped is the art of the behavioural “nudge.” Popularised by Thaler and Sunstein’s book Nudge and embraced by government “nudge units” around the world, these small tweaks to choice architecture gently steer behaviour without heavy-handed mandates.
Crucially for universities on a shoestring, nudges are low-cost, low-risk interventions. Think email wording, default settings, reminder prompts, that can shift behaviour in meaningful ways. Nudges won’t fill a £10m deficit or replace proper funding reform. But deployed properly, they might help soften the blow of today’s structural pressures. In tough times, a series of 1% gains in efficiency or revenue can add up. To turn the usual phrase on its head, let’s consider “growth by a thousand nudges”.
Student payments
We’ll begin with the easy solutions: getting students to actually pay what they owe. On time, preferably, and without your finance office having to send ransom-note emails. Sanctions are relatively commonplace: late payment fines, blockages on course registration or refusing library access. While these can work in the right contexts, they are not the only answer. A true nudge is more carrot than stick, gently coaxing rather than coercing.
So how do we nudge today’s students into timely payments? Many universities already let students pay tuition or accommodation in instalments, but often it’s opt-in. Let’s flip the norm: at enrolment, default everyone into termly recurring card payments. Those who genuinely prefer to pay in full or via alternative means can opt out, but it’s cognitively just that bit harder. Human inertia does the heavy lifting here, as seen in the remarkable success of UK pension auto-enrolment back in 2012.
Let’s talk social norms. The Behavioural Insights Team, formed by the Cameron government in 2010, famously showed that a well-crafted message about what others are doing can boost compliance rates. In one HMRC trial, adding a line telling late taxpayers that most of their neighbours had already paid boosted compliance by 15%. For universities, the equivalent is letting students know that “85% of students have settled their fees by now – thank you for being one of them”. In doing so, you’re not actually accusing students of being delinquent – you’re assuming the best and establishing an expectation of responsible behaviour. The herd instinct does the rest.
Another nudge: salience and framing. Let’s take payment reminders. Inside the message, HEIs can highlight why paying on time matters in terms students care about. Framing payment as contributing to a shared community good can help students embrace pro-social behaviour (or at least guilt them mildly into compliance). The key is making the request human and visible and turn that abstract fee into real impacts. Many students aren’t actively dodging their dues; they’re just busy, cash-poor or honestly forgot in the blur of deadlines and SU discount pint nights. A well-timed nudge, like a WhatsApp message the week before due date (not a PDF letter no one will read), with a one-click payment link, helps remove friction.
This won’t cover off all late payers, but it may mop up a material few. Some students genuinely can’t pay on time, and no cleverly worded email will change that. But plenty of delays are down to forgetfulness, confusion, or procrastination. Nudging addresses those at virtually zero cost.
Budgeting
In university budgeting, every department stakes its claim, finance directors attempt to enforce discipline without ruffling too many feathers, and somehow it all adds up (or doesn’t). In good times, budgeting is tedious; in a crisis, it’s gladiatorial. The risk is that each unit, fearing cuts, will play their hands wisely by bidding for as much additional cost as possible, and then begrudgingly meets the centre halfway. We need to use nudges to turn budgeting into something approaching a rational exercise.
Let’s start with the all-too-common end-of-year spending spree. Departments have instinctively learned that if they don’t burn through their budget, the centre will apply pressure to next year’s envelope. Then, come July, we see panic-buying to spend up the year-end reserves. It’s a predictable outcome based on perverse incentives.
We could try to change the incentive e.g. carry-overs, but let’s find a nudge instead. We could encourage transparency and accountability by publishing a simple report of each department’s year-end spending patterns. If Department X suddenly spent £200k in the final fortnight on “miscellaneous supplies”, let that be known in a non-punitive but factual way. Social pressure can do what edicts cannot. Make frugality, or at least steady, planned spending, the visible social norm. It’s essentially the peer comparison nudge again.
We could also introduce a form of light pre-commitment to cost-saving. At the start of the financial year, ask each budget-holder to publicly state one or two ways they plan to economise or improve value for money in their area. Perhaps the Head of Department says they’ll negotiate cheaper prices on lab supplies, or the Director of Library Services pledges to cut down duplication in journal subscriptions. Write these down and share them across the institution. In psychology, when we make a public commitment, we’re much more likely to follow through because our reputation is on the line. By nudging managers to articulate how they will help the bottom line, you create a gentle pressure all year round.
We can also deploy real-time commentary and salience to budgeting. Annual budgets often suffer from a lag problem: by the time you realise you’re overspending, it’s too late to course-correct without drastic measures. We could give departments a simple dashboard that updates regularly showing their spending against plan and against other departments. Conversely, if they’re way under, it could either reassure them, or if truly under-resourced, strengthen their case for more funds, which is useful info for the centre. The key is making the abstract budget tangible and comparable. Numbers in spreadsheets aren’t compelling for average people, but a simple gauge or red-yellow-green indicator might be. It’s a nudge for the senses.
In summary, budgeting by nudge is about cultivating an environment where good financial behaviour is the path of least resistance and even a point of pride. Rather than relying solely on top-down edicts, it enlists the psychology of the people holding the purse strings. When done correctly, you won’t have every school and department miraculously under budget – but you might have fewer nasty surprises and emergency deficits. To paraphrase the OfS, many institutions are placing extremely large bets on student recruitment. Nudging won’t prevent the crash, but they improve your odds of surviving it with minimal damage.
Let’s not forget resource allocation models: how we cross-charge internally can nudge behaviour too. For example, a Finance team may highlight how much each department’s space footprint costs but not charge for it directly. Here we can transparently account by saying “Department X’s share of estates costs is Y%” might nudge those departments to, say, release unused space or co-locate activities to lower their perceived share. By making these internal cost comparisons salient, you nudge budget-holders to take actions that incidentally save money, like consolidating two half-empty admin offices into one.
We could also consider external services. Universities often run things like gym memberships, catering, or conferences that bring in additional revenue. Here we could consider a simple approach like decoy pricing. If you offer a basic, standard, and premium membership for the campus gym, include a purposely over-the-top premium tier that only a few will buy – its real role is to make the mid-tier look more reasonable. It’s a nudge that can increase overall revenue without actually forcing anyone into the top tier (which they’d likely avoid anyway).
Part One ‘nudge’ summary:
Student payments
- Use defaults (e.g. termly recurring payments) to reduce friction
- Apply social norms in messaging (“85% of students have already paid”)
- Reframe payment reminders to be human, timely and values-led
- Make compliance easier with one-click mobile payment prompts
Budgeting
- Curb end-of-year spending sprees with transparency nudges
- Ask departments to pre-commit to one or two cost-saving ideas
- Use real-time dashboards to improve budget salience and responsiveness
- Share peer comparison data to promote frugality and pride in value
Small changes, real impact with SUMS
These examples show how small, well-placed nudges can help universities improve income collection and budgeting discipline – two areas where even marginal gains can make a significant difference. With financial pressures mounting, it’s not just about cutting costs, but finding smarter ways to work.
Through our Efficiencies campaign, SUMS is supporting universities to identify and implement practical, low-cost changes that drive better value. If you’re looking to boost financial resilience without adding pressure to your people, a thousand nudges might be the place to start – and we’re here to help you get going.
Continue to Part Two, where we explore how nudges can influence procurement and broader organisational culture.
