A third of universities in deficit as regulator warns six may need emergency loans

Forty-six universities in England, about a third of the sector, ran a deficit in the last academic year and six are at risk of being unable to meet their obligations by 2027 without “significant restructuring or external support”, the Office for Students said on Tuesday in its annual assessment of the sector’s finances.

The regulator said universities had cut 11,000 jobs in two years and closed or suspended 430 courses, concentrated in modern languages, humanities and creative arts, and that a further 8,000 job losses were planned. It attributed the squeeze to a 21% fall in international student numbers since 2024, the frozen domestic tuition fee, which has lost a third of its value since 2012, and rising staff and pension costs.

The report does not name the six institutions, but says they are “predominantly smaller, with a high dependence on international recruitment in a small number of subjects”. The regulator has for the first time asked the government to establish a formal mechanism for an orderly closure or merger, saying that “the absence of one is itself a risk to students”.

The vice-chancellor of a post-92 university in the north-west, who asked not to be named because of ongoing talks with lenders, said the sector had been “living on a Nigerian and Indian postgraduate boom that was never going to last”. “We built a business school for 1,400 overseas students. We have 500. The building is still there and so is the loan,” he said. “The regulator is right that we need a plan for failure. It is a bit late to be asking.”

The University and College Union said the losses were a direct consequence of government policy on visas and fees. Meera Patel, the union’s regional official for the north-west, said staff were “paying with their jobs for a market that ministers created and then broke”. “Every one of these universities is the largest employer in its town. When it goes, it does not go quietly,” she said.

The government raised the domestic fee cap to £9,790 for this academic year and has indicated it will rise with inflation in future, but has resisted calls for a one-off bailout. The Department for Education said universities were “autonomous institutions responsible for their own finances” and that it was “working with the Office for Students on the small number of cases where there is a risk to students”.

The regulator’s assessment also noted a growing divide. The 24 research-intensive universities in the Russell Group increased their combined surplus last year, helped by recovering international recruitment at postgraduate level, while institutions outside the group saw their average margin fall to -1.8%.

A merger between two universities in the Midlands, which would be the first in England since 2004, is expected to be announced before Christmas.