Universities in the UK face credit crunch

Figures from The Times show that universities have over £10.8 billion worth of debt with borrowing having doubled for universities such as Southampton, University College London, Glasgow and Imperial College London.

Experts have stated that in the light of financial uncertainty, universities have continued to raise funds through borrowing in a race to compete and attract students.

Imperial College London has the greatest debt pile at £470 million, having borrowed to fund a vast expansion in White City and Kensington. UCL is spending £1.2 billion on the refurbishment of its Bloomsbury buildings and a new 11-acre campus on the 2012 Olympic site, figures from The Times show.

Too many institutions are borrowing too much

– Nick Hillman, director of the Higher Education Policy Institute

The Higher Education Funding Council for England announced that funding for universities would be cut by £150 million in 2015/2016.

In the light of funding being taken away matched with an increasing pressure to compete, universities are relying upon financial markets.

It was reported in Times Higher Education that Reading University has made a loss last year of £27 million on its Malaysia campus and University of East London closed its Cyprus campus in 2013, only six months after opening, and having recruited only 17 students.

Meanwhile, Warwick University recently went back on its plan to have a California campus.

A recent December ruling from the ONS (Office for National Statistics) means that student loans will now appear in the government’s deficit and public finances will be brought closer to “economic reality”. However, this means the government are now eager to reduce fees from £9,250.

Brexit is also a cause for concern for the lucrative oversees market, with smaller universities expected to suffer in particular.

Nick Hillman, director of the Higher Education Policy Institute spoke about the issue: “too many institutions are borrowing too much”

He added that: “There are unprecedented levels of uncertainty with Brexit, the tuition fees review and the spending round. These factors are material for those who lend large sums to universities. Oxford, Cambridge and some universities will always be fine, but others will face a credit crunch in 2019.”