Over 4 in 10 universities facing financial deficit by summer, as OfS prepares for university closures

Four in ten universities across the country are facing a financial deficit, as drops in international student recruitment and inflationary pressures place higher costs on universities. 

The Office for Students (OfS), the regulatory body for universities, is making preparations to force closures and staff cuts. 

The financial strain on universities has been a growing issue due to reduced international student recruitment and rising costs.  

The impacts of Covid-19, Brexit, and new restrictions on visas have meant less income for educational institutions. International student recruitment is down 16% this year and is expected to fall by 21% next year.  

Inflationary pressures have resulted in rising costs for staff, building maintenance, and equipment. To ease the burden, tuition fees have recently been raised for home students in England and Wales. Nevertheless, some institutions continue to face millions of pounds worth of debt. 

Universities have been calling for more per-student funding, stable visa policies, and improved research grant coverage to avoid long-term damage. Already, actions have been taken, some courses have been cut, staff laid off, and buildings closed, but this may not be enough. Institutions have also been cutting available services.

We do not expect to see multiple university closures in the short term […] but the medium-term pressures are significant, complex and ongoing

Philippa Pickford, director of the OfS

Jo Grady, general secretary of the University and College Union, stated: “Over 10,000 jobs are already set to disappear from the sector as vice-chancellors attempt to bin courses and cut student provisions to the bone”. 

By doing so, they may reduce the quality of the student experience and place people who require help at risk. A poll by Universities UK (UUK), the industry body, has suggested that almost half of institutions were forced to close courses for students to reduce costs. 

As a result, the OfS is preparing for potential failures, especially from the less selective universities.  

Philippa Pickford, director of the OfS, stated: “We do not expect to see multiple university closures in the short term […] but the medium-term pressures are significant, complex and ongoing”.  

She added that closures were “something that we are preparing for and making sure that we’ve got processes in place”.

The government is expected to announce its wider higher education reform plan in the summer.