In Depth

Strapped for cash: why are Britain’s universities running out of money?

Institutions put on warning list owing to ‘unrealistic’ student intake projections

One in five British universities has been placed on a financial risk list by regulators.

Figures released by the Office for Students (OfS) show that 71 universities or institutions registered with it have been put on “enhanced monitoring”, as regulators are worried about their finances. 

In the majority of cases, the step has been taken because of concerns that the universities’ forecasts of growth in student numbers have “little or no supporting evidence about how that would be achieved”, according to an OfS report.

Why is the regulator concerned about university finances? 

The Times reports that many institutions were put on the regulator’s warning list because they had made “unrealistic projections of international student numbers”. International students pay higher tuition fees to study in the United Kingdom. 

Some universities had borrowed money based on higher numbers of student projections and the tuition fees they bring, despite uncertainty about future student enrollment figures.

Institutions are also required to set out plans for how their students will be protected in the event of a university closing. The OfS found these plans to be “very poor” at many universities.

Susan Lapworth, director of competition and registration at OfS, said: “Too many providers glossed over the possibility of closure in their student protection plans, or relied on ambitious projections for student recruitment when making financial plans,” reports The Independent.

The OfS report added that a “significant number” of providers have been subject to action because of worries about their financial sustainability.

Did the regulator find other problems in British universities?

Additional factors that can result in the regulator intervening include poor student outcomes, management and governance.

In many cases, the OfS report found that regulators had intervened because of concerns over access and participation plans for underrepresented groups. 

Lapworth added: “The analysis shows, starkly, that universities must improve the work they do to ensure that students from disadvantaged backgrounds are supported not only to get into higher education, but to get on, too.”

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