What is happening?
A growing number
of UK universities are in financial trouble.
- Almost
one-third of UK universities reported a deficit (they spent more than
they earned) this year.
- The Office
for Students (OfS) warns that around 25 universities could be at risk
of closure within a year, and 50 institutions are in high-risk
categories over the next three years.
This is the worst
financial situation the sector has faced in many years.
Why are universities in deficit?
There are several
main reasons:
- Frozen
tuition fees
- Domestic
student fees have not increased with inflation since 2017.
- In real
terms, the value of fees has fallen by 26%.
- Falling
public funding
- Government
grants and funding for expensive subjects have dropped by 16–19%.
- Unstable
international student recruitment
- International
student numbers fell by 14% in 2024.
- Although
numbers are now growing again, they are still lower than in 2023.
Because of these
problems, universities have been relying heavily on international student
fees to survive.
What is the new problem? The
International Student Levy
The UK government
plans to introduce a new tax on income from international students
starting in August 2028.
- This levy is
expected to cost universities £330 million every year.
- It will
apply mainly to English universities.
Universities say
this will make the financial crisis much worse and could push more
institutions towards closure.
Universities UK
warned the levy could:
- Damage
universities
- Reduce
economic growth
- Make the UK
less attractive for international students
How serious is it?
Some examples of
big deficits:
- Coventry
University: £60 million deficit
- Queen’s
University Belfast: £22.8m
- University
of Sussex: £22.7m
- University
of Derby: £22.6m
- De Montfort
University: £22.6m
- University
of East Anglia: £22.3m
An independent
analyst said only 14 universities are financially stable.
What are universities doing?
Many are taking “radical
action”, such as:
- Voluntary
redundancy schemes (staff leaving)
- Cutting
costs
- Delaying
projects
- Investing in
overseas campuses to earn future income
Bigger policy shift
- The UK’s new
international education strategy no longer sets recruitment targets.
- The
government wants to reduce net migration, which may limit future
international student growth.
Experts warn
universities should not rely too heavily on students from one country or
on continuous growth in international numbers.
In simple words
- UK
universities are running out of money.
- Years of low
fees and low funding caused this.
- International
students helped fill the gap.
- Now the
government plans to tax international student income, which could
make things much worse.
- Some
universities may merge, shrink, or even close if the situation does
not improve.
For
guidance on studying in the UK and the latest visa and policy updates, contact
us today.
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