Some universities are at risk of going bust before students celebrating their A-levels this week will have finished their degrees, experts have warned.
Bankruptcies, mergers and course closures are expected to accelerate from 2030 because of a sharp drop-off in British students, according to analysts.
But the sector is already struggling due to an immigration crackdown on lucrative overseas students and limits on tuition fees for British students.
If university closures “don’t happen before 2030, they’ll jolly well happen after 2030,” said Nick Hillman, director of the Higher Education Policy Institute (HEPI) think-tank.
Universities are set to accept record numbers of UK undergraduates this year to compensate for a fall in international students, but this lifeline may no longer be available to them in a few years.
Analysts previously said at least 119 higher education providers, accounting for 43 per cent of the sector, are “struggling financially” because of budget deficits, including at least 57 facing significant financial difficulties following three consecutive years of shortfalls, citing data from the Office for Students.
It comes as thousands of students will receive their A-level results on Thursday, with record numbers expected to use clearing to find an undergraduate place, according to the Universities and Colleges Admissions Service (Ucas).
Looming mergers
Hillman said more mergers between institutions will “definitely” happen and are likely in the coming year.
The University of Greenwich and the University of Kent merged in August, while King’s College London and Cranfield University outlined plans to do so in May.
The University of Dundee was bailed out by the Scottish Government last year after running into financial difficulties.
Hillman said course closures could increase, with the languages, humanities and creative arts such as music particularly at risk.
Amid a backdrop of declining birth rates, he said the number of 18-year-olds in the UK “falls off a cliff” after 2030 and it was an “absolute certainty” that this would increase financial difficulties for universities.
“We think there’s a lot of competition for students now – just wait until what happens after 2030, because we ain’t seen nothing yet,” he said.
He said the Russell Group of elite universities is accepting more students, which will leave fewer students for less prestigious universities as the population shrinks.
A previous report by HEPI found that the young population, from whom 80 per cent of undergraduate students are recruited, will decline rapidly after 2030, which will cut the income universities receive from them by 20 per cent by the end of the decade.
The UK’s top universities – known as “higher-tariff” institutions – are expected to recruit a larger and larger proportion of British students, leaving the others at risk of losing over 25 per cent of their undergraduate student fee income, the analysis found.
Higher-tariff institutions, which are the most selective and include the Russell Group of universities, have had the biggest increase in the number of students they take in each year.
Courses closing
Ucas said applications to Russell Group institutions have risen this year amid record overall numbers applying to university.
Dr Jo Saxton, its chief executive, said record numbers of students would be accepted into their first choice of university this year.
Ucas’s director of data, Maggie Smart, added there would be a “range of fortunes”, with specialist institutions already seeing a decline in applications.
There are about 27,000 courses available in clearing this year, which is slightly lower than around 30,000 reported in previous years, according to Ucas.
Saxton said the number could increase but if it does not, the decline will “likely” be because of course mergers and closures.
She told The i Paper universities could be forced to make changes to adapt to a declining population of school leavers in the 2030s.
Asked if the drop in UK students around 2030 presents potential risks and challenges for universities, she said: “There are some strategic choices coming, definitely. But they are a few years off the horizon yet.”
She suggested it could be a few years before the sector feels the impact.
“Yes, the population starts to decline from 2030, but it takes until 2034 for the population of 18-year-olds to get back to even just where it is today,” she said. “So I think it’s some time before that will result in significant structural change.”
Asked again about the issue at a webinar with HEPI on Tuesday, she said it is “quite a long time before we’re in an apocalyptic place”.
Iain Mansfield, head of education at the Policy Exchange think-tank, said record numbers of students were likely to be accepted into higher-tariff institutions this year, which would leave less selective universities scrambling to fill spaces.
“If a university fails to recruit the students it wants to at results day, particularly for a university which is heavily dependent on undergraduate students, that in itself could trigger new rounds of redundancies and departmental closures,” he said.
Joanna Burton, associate director at the Russell Group, said: “More places at leading universities with great outcomes is good news for aspirational students, and for the UK’s future workforce.
“Russell Group universities maintain very high academic standards and remain highly selective. Admissions teams always exercise professional judgement when assessing applicants, and there is no evidence of lowering standards. Universities admit students who show they have the potential to succeed and thrive on their chosen course.”
Universities UK was approached for comment.
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