Regulator Warns of University Closures Due to Declining Student Enrollment
Researchers predict that by 2026-2027, nearly two-thirds of higher education providers will be operating in deficit, with 40 percent facing low liquidity by 2024.
An independent regulator has cautioned that universities in England are at risk of financial struggles and potential closure due to a decrease in student applications and inflationary pressures.
Universities and other higher education providers provide their financial forecasts and expected student numbers to the OfS.
The regulator’s report published on Thursday questioned the credibility of the data received for the sector as a whole.
Susan Lapworth, the Chief Executive of OfS, described the financial landscape in the higher education sector as increasingly challenging.
According to researchers, many universities will need to revamp their funding strategies to prevent potential closures.
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The watchdog estimates that by 2026-2027, nearly two-thirds of institutions will be in deficit, with 40 percent facing low liquidity by the year’s end. In a worst-case scenario, over 80 percent would be in deficit and nearly three-quarters would have low liquidity levels.
According to the OfS, some institutions will struggle to grow in a competitive market with declining applicant numbers, while others may succeed.
Visa Schemes
The reported drop in foreign student dependant visas between January and March, along with new visa restrictions, reflects the challenges faced by the higher education sector.
Home Secretary James Cleverly’s efforts to reduce net migration have impacted student visa regulations and enrollment rates.
Universities are advised to reassess their assumptions about student increases and take steps to secure their financial stability, as highlighted in the OfS report.
The report also raises concerns about universities’ reliance on international student fees, emphasizing vulnerability when recruitment is heavily focused on a single country.
The ongoing cost-of-living crisis, affordability of university facilities, and the hefty cost of sustainability commitments contribute to the financial challenges faced by higher education providers.
High Costs
With undergraduate fees frozen since 2017 and inflation rates on the rise, universities are grappling with diminishing income in real terms, impacting their ability to sustain research initiatives and diverse course offerings.
