Many Universities across the United Kingdom are facing a funding crisis and some must make cuts to avoid being shut down, the higher education watchdog has warned.
The Office for Students’ annual report into the financial health of universities said the sector was over-reliant on cash from foreign students and many will need to make ‘significant changes’ to avoid closure.
It warned that the majority of universities in England faced deteriorating finances in the next few years, with 40 per cent expecting to be in deficit during this academic year.
PROMPT NEWS recalls that the Home Office commenced the implementation of its policy banning foreign students from bringing in dependants via the study visa route effective from January 1, 2024.
The implementation of this policy has witnessed a significant decrease in the number of international students applying to UK Universities.
The report said an increasing number would need to make ‘significant changes to their funding model in the near future to avoid facing a material risk of closure’. Cuts could include phasing out some degree courses and mergers with other institutions.
The OfS said threats to universities’ financial stability include a drop in fees from British students, which have been capped, meaning a real-term decline due to inflation, and a downward trend in applications from students from EU countries.
There has also been a reduction in applications for student visas from non-EU countries, as well as rising staff costs, pension schemes and maintenance bills, and extra costs incurred through reducing carbon emissions to meet net-zero commitments.
The report said many universities had unrealistic forecasts for a growth in student numbers which had not been borne out by recent applications. It added that the higher education system was reliant on its income from international students to balance its budget, adding: ‘This is an increasingly precarious model.’
Global politics and economics meant the UK could not control the future numbers of international students, the report said.
MPs have announced an investigation into British universities’ dependence on income from international students. The Commons education committee will look at whether institutions are overusing overseas students to cover budget shortfalls.
Domestic undergraduate tuition fees have been frozen at £9,250 since 2016, but leading universities are able to charge about £26,000 a year for international undergraduates. The Russell Group, which represents the top universities, said changes in government policy had led to a fall in numbers of international students, and further restrictions risked destabilising the sector.
Chief executive Dr Tim Bradshaw said: ‘Growing funding shortfalls for domestic teaching and research means cross-subsidy from other sources – primarily international student fees – has become increasingly important to the sector’s financial health.’
The University and College Union said the higher education funding model was ‘broken’ and needed radical change.
General secretary Jo Grady said: ‘The Tories seem intent on making the situation worse through constant attacks on migrant students and workers. READ ALSO:
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‘The graduate visa route must now stay, the limits on graduate students’ family members coming to the UK should be reversed and the salary threshold needs to be lowered. An employer education levy could pay for a publicly funded higher education system instead of tuition fees.’
The Department for Education said: ‘Universities are independent from Government, and it is for them to decide on how best to manage their finances. Along with the OfS, we will continue to monitor financial sustainability in the sector.’
UK DAILY MAIL
