The monitoring group for higher education claims that colleges and universities are now facing a cash crunch and are implementing budget cutbacks to stay open.
The Office for Students’ annual report points out that universities’ reliance on tuition from overseas students puts them in a precarious financial position. It cautions that several institutions could be forced to shut down unless significant changes are made.
According to the warning, many English institutions are expected to face deteriorating financial situations in the next few years. For the current school year, almost 40% of these schools expect to incur a deficit.
More organizations will need to make significant changes to their financing approach quickly to avoid closure, the research claims. Consolidation with other educational institutions or the progressive elimination of specific degree programs are two potential solutions.
A fall in real-term revenue owing to inflation and a reduction in fees from British students as a consequence of the cap are two of the difficulties that the OfS noted as obstacles to universities’ capacity to remain financially stable. Furthermore, applications from students from EU nations have been declining.
Reductions in carbon emissions to fulfill net-zero targets have contributed to higher personnel costs, maintenance bills, pension plans, and fewer applications for student visas from non-EU nations.
According to the research, several schools were enthusiastic about the growth in student enrollment, but new application data disproved their estimates. The financial stability of the higher education system is highly dependent on the funds received from outside students, and the model’s stability is deteriorating.
The research claims that international politics and economics will make it difficult for the United Kingdom to control the number of foreign students it accepts in the future.
British institutions’ dependence on income from overseas students is being investigated by MPs. The House of Commons education committee will look into whether schools are putting too much emphasis on foreign pupils to make up for budget shortfalls.
While top institutions may charge almost £26,000 per year for foreign students, domestic undergraduate tuition costs have been at £9,250 since 2016. Concerned about the drop in foreign student enrollment caused by recent policy changes, the Russell Group—representing the top universities—has voiced its disapproval. They cautioned that more regulations may cause problems for the industry.
