London (Parliament News) – A study by the Office for Students says a growing number will need to make substantial changes to their funding model
A growing number of universities in England face “a material risk of closure” unless they dramatically trimmed costs or merge over the next few years, according to the higher education regulator’s annual health check.
How Many Universities in England Face Budget Deficits?
The report by the Office for Students (OfS) demonstrates a bleak picture of universities’ overreliance on international students to fill the gaps left by the declining income from domestic student payments, with the OfS caution that 40% of England’s universities are anticipated to run budget deficits this year.
Susan Lapworth, the OfS chief executive, stated: “Financial performance and strength vary especially for different institutions and our analysis shows that an increasing number will require to make significant changes to their funding model in the near future to avoid facing a material risk of closure.
Is Financial Sustainability a Concern for English Universities?
“Many universities have already started this necessary work to secure their long-term sustainability. They are taking difficult, but necessary, decisions about the shape and size of their institution. They are working with others on mergers or centralised services. And they are doing all of this while guarding the quality of their courses and the interests of their students.”
Lapworth expressed the report was “a signal” for universities to question their assumptions about prospective student recruitment at home and abroad, stating: “The numbers reported to us for the sector as a whole are just not credible.”
While the OfS said it had no worries about the “short-term viability” of most providers, it’s modelling for a “reasonable worst-case scenario”, involving substantial reductions in international student numbers without cost-cutting, forecast that four out of five institutions would be in the red by 2027.
What Actions Are Needed to Avoid University Closures?
Alex Bols of the GuildHE body, representing 60 universities and colleges, stated: “As the financial health of the higher education sector becomes ever more difficult the need for a long-term budget solution becomes ever more urgent. “The increasing expenses facing universities, decreasing real-terms tuition fee income and risks to other revenue streams mean that the likelihood of institutional closure or merger increase.”
The government’s recent regulations of its student visa regime – such as blocking many international students from including family members on their visas – have already noticed a significant fall in international applications, with one survey conveying a 27% drop in applications for taught postgraduate courses for subsequent years.
James Cleverly, the home secretary, is still weighing restrictions to the graduate visa route, which permits international students to stay and work in the UK for two to three years after finishing their studies, which universities say is necessary to compete with rivals such as the US and Australia that have similar offers.
The decline in applications and the persistent freeze on domestic undergraduate tuition costs, which have been placed at ÂŁ9,250 since 2017 and are frozen until 2025-26, have set off a wave of course closures and redundancies.
Figures gathered by the University and College Union (UCU) offer more than 50 universities and colleges are already making redundancies and other cuts.