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Through a series of national and academic studies conducted over the last decade, the deleterious impact of hate crime and incidents on students’ wellbeing, attainment rates, and the overall student experience in the UK is well-documented. Existing universities’ responses to such non-academic misconducts, however, have been criticised for their inability to address the problem. To understand the reasons underpinning such criticisms, a critical discourse analysis of policies at 18 publicly funded British universities was conducted in a doctoral research project, where it found that a punitive discourse has been embedded in the institutional policies. Based on the new empirical findings, this paper examines the limitations of punitive approaches to hate crime and incidents. In addition, this paper also explores the potential of restorative justice approaches as an innovative form of response that will be particularly suitable for addressing hate crime and incidents within the context of higher education institutions. Premised on the understanding that crimes are not simply a violation of laws, restorative justice focuses on the harms caused by the criminal offence and emphasises the importance of moral learning as well as positive human development in healing the harms inflicted. Taking its purpose into consideration, restorative justice may be suitable for addressing experiences of hate crime and incidents. This is because restorative justice processes facilitate the reparation of harms by challenging biases and misconceptions towards identity differences among offenders, whilst the emotional and psychological damages experienced by victims may be alleviated through such dialogue-driven processes. Therefore, this paper suggests that restorative justice approaches hold the potential to heal fragmented community relationships in universities. Moreover, as the student population across British universities becomes increasingly diversified following the marketisation and internationalisation of the higher education sector, it is imperative for biases to be challenged within such educational settings through restorative justice.