Almost half of English\u00a0higher education institutions still face a financial deficit this year despite the uplift in tuition fees, the regulator has warned.<\/p>\n
New modelling by the Office for Students (OfS) published on 20 November shows 124 providers, about 45 per cent of the sector, may report a deficit in 2025-26 after a turbulent period for domestic and international student recruitment. The figure is higher than the\u00a034 per cent of providers that forecast a deficit in their financial returns in May.<\/p>\n
The OfS suggests that universities have continued to be \u201coverly optimistic\u201d in their forecasts, with acceptances of UK undergraduate students through Ucas growing 3.1 per cent in 2025 compared with last year \u2013 below the sector\u2019s forecast growth of 4.1 per cent.<\/p>\n
The data also confirms that research intensive universities have tended to scoop up more students<\/a> to the detriment of other providers, with these typically higher-tariff institutions seeing UK undergraduate recruitment rise 9.9 per cent, while lower-tariff institutions experienced \u201cweaker than expected recruitment\u201d.<\/p>\n It added that many experienced declines in Ucas acceptances \u201cdespite predicting growth\u201d.<\/p>\n The picture is more mixed for international students, with larger research-intensive universities experiencing a 7 per cent decrease in the number of Confirmation of Acceptance for Studies (CAS) issued to postgraduate international students. According to the OfS, this is partly driven by a decline in the number of students coming from China.<\/p>\n \u201cConversely, all other provider groups have seen growth in international students,\u201d a report from the regulator says.<\/p>\n As a whole, the figures mean that the sector could see a total net reduction in annual tuition fee income of \u00a3437.8 million in 2025-26 compared with forecasts. Without mitigating action, this will push many into deficits, the regulator warned.<\/p>\n The modelling also shows that 45 providers could have less than 30 days\u2019 liquidity in 2025-26, compared with 41 providers that have forecast low liquidity.<\/p>\n The OfS warned that there continues to be \u201csignificant volatility\u201d in student recruitment, and that \u201cthe growth seen this year may not continue in subsequent years\u201d.<\/p>\n \u201cAs even the growth seen this year is below provider forecasts, there is no doubt that the financial outlook for the sector remains challenging.\u201d<\/p>\n Although\u00a0the modelling includes the 2025 tuition fee uplift, it does not account for the proposed international student levy, the details of which are set to be revealed in next week\u2019s autumn budget and could cost the sector millions of pounds<\/a>.<\/p>\n Philippa Pickford, director of regulation at the OfS, said the regulator did not expect \u201cmultiple universities to close in the short term\u201d but warned that some institutions \u201cneed to take radical action, which might include considering different structures or business models\u201d.<\/p>\n Some universities have begun the process of consolidating with other institutions to shore up their finances. Most notably, the Universities of Greenwich and Kent have announced their intention to merge<\/a>.\u00a0<\/p>\n \u201cUniversities now have welcome clarity over tuition fee levels in future years, and we also know that many institutions are continuing to take significant steps to cut costs, work collaboratively with partners and seek opportunities for realistic growth,\u201d said Pickford.<\/p>\n However, she continued, \u201cSome universities continue to base their forecasts on unrealistic expectations of growth, while others are taking short-term measures rather than tackling transformational changes needed to right-size their businesses.\u201d<\/p>\n