Universities across England have suffered a decline in income for the third year running, according to a report by the Office for Students (OfS), which warns that shrinking numbers of international students could lead to deeper financial cuts within the sector.
Revenue Loss Forces Cuts to Courses, Jobs, and Infrastructure
The OfS annual financial health report reveals that many institutions are responding to mounting budget deficits by axing academic programmes, laying off staff, and slashing spending on buildings and maintenance.
The report also predicts that the higher education sector will offload over £400 million worth of land and property in 2024 to stay afloat.
Philippa Pickford, Director of Regulation at the OfS, said the main cause of the crisis was the underperformance in international student recruitment.
“Projections now show that enrolment of non-UK students for 2024-25 will be around 21% lower than previously anticipated,” she explained. “This has left nearly half of all universities forecasting deficits in the coming year.”
Reliance on International Fees and Policy Shifts Take a Toll
For years, universities have relied on the premium fees paid by overseas students to cross-subsidise the loss-making domestic tuition model.
However, post-Brexit immigration reforms and stricter visa policies introduced in 2023 have triggered a steep decline in international applications, with further restrictions reportedly under consideration.
Jo Grady, General Secretary of the University and College Union (UCU), said the sector is on the brink, with an estimated 10,000 jobs already lost.
“The Home Office must rethink its approach to international student policy. If Labour mimics Reform’s hard-line stance, we risk pushing universities to the brink of collapse,” she warned.
Public Support for International Graduates Remains Strong
A recent poll by More in Common and University College London found that 51% of British voters believe it benefits the UK when international students remain to work after graduation — including a third of 2024 Reform Party voters.
No Immediate Wave of Closures, But Long-Term Reform Needed
While the OfS maintains that widespread university closures are unlikely in the short term, Pickford cautioned that some institutions may need to make difficult decisions.
“We are closely monitoring a small number of providers whose financial viability is cause for concern,” she said, adding that the regulator is liaising with the government to safeguard students in case of potential closures.
Pickford also encouraged prospective students to consult universities’ published financial statements when choosing where to study. “The chances of a university failure significantly affecting students remain low. But institutions must act now to prevent future instability.”
Sector-Wide Deficits Projected if Reforms Stall
The regulator’s worst-case scenario envisions that by 2027–28, two-thirds of universities could be operating in deficit due to increased competition and a shift in student demographics.
More selective institutions may look to replace lost international enrolments by expanding their intake of domestic students, further squeezing financially vulnerable universities.
Education Secretary: Tuition Fee Reform Justified
Education Secretary Bridget Phillipson said the findings vindicate the government’s decision to raise domestic tuition fees and previewed additional reforms in a forthcoming white paper.
“I tasked the OfS with prioritising financial sustainability last year. These figures show why fundamental change is necessary,” she said.
