British universities are facing a drop in income for the third consecutive year, as reported by higher education authorities.
The Office for Students (OFS) revealed in its Annual Financial Health Check that many institutions are attempting to address budget deficits by slashing spending on buildings and maintenance, alongside cutting courses and staff. This year, it’s anticipated that universities will sell over £400 million in land and property.
“This situation is largely due to not meeting the expected recruitment numbers for international students. Projections for 2024-25 indicate a drop of about 21% compared to last year’s estimates,” the report states.
“The financial pressures in this sector are very real. We’re noticing a decrease in surplus and liquidity levels,” it added.
Universities depend on the higher fees from international students to offset the losses from domestic tuition fees, which are being diminished by inflation. Recent changes to immigration and visa regulations have significantly impacted international recruitment trends since 2023, and further limitations from the government seem likely.
Joe Grady, the general secretary of the university union, pointed out that the findings highlight the ongoing financial strain on universities, noting that around 10,000 jobs have been lost in the sector.
Grady emphasized, “The Home Office needs to reconsider its stance on international students, especially in light of further potential obstacles imposed by immigration policies which could hinder students from studying here.”
Interestingly, a recent poll at University College London revealed that 51% of UK voters support allowing international students to work after finishing their studies, indicating a more positive sentiment towards this issue.
The OFS regulators stated they don’t foresee widespread closures of universities in the immediate future, but they did caution that institutions need to implement further changes to enhance their financial stability.
Pickford, a representative from OFS, suggested prospective students should examine public financial records of universities to help inform their choices if they have concerns.
Most university students, according to Pickford, shouldn’t be overly anxious about these financial issues, as the likelihood of significant failures is still low. This is more about encouraging universities to take decisive action now to prevent future difficulties.
OFS is collaborating closely with a select few agencies that are worried about financial viability, and they’re engaging with government officials to ensure student protections are in place should a closure occur.
In a somewhat alarming forecast, OFS predicts that “market competition” could lead to two-thirds of universities running deficits by 2027-28.
Education Secretary Bridget Phillipson pointed out that these figures bolster the government’s decision to increase tuition fees in the country, hinting at subsequent movements later this summer.
“Last year, we instructed OFS to concentrate on tracking financial sustainability. Further reforms are necessary to improve the foundation of higher education, and universities need to do more to stabilize their finances,” added Philipson.
