A university in Britain has never gone bankrupt, which is quite a record for a sector with more than 900 years of history.
The day may not be too far away, if the sounds of distress emanating from the halls of academia are anything to go by.
The head of the largest higher-education union has called for an emergency rescue package to stave off “catastrophe.” The crunch should surprise nobody. This was a crisis foretold.
A succession of reports has warned of the precarious funding structure underpinning UK universities.
Tuition fees for domestic students have been held at £9,250 ($11,925) since 2017, and have been increased by only £250 in the past 12 years.
They are now worth less than £6,000 in 2012 prices. Without the rich endowments that backstop US universities or other significant sources of income, British institutions have turned to international students, who pay far higher fees.
Their dependence on this lucrative revenue stream has increased as the numbers surged. Once growth turned to shrinkage, a reckoning was inevitable.
About 40% of higher-education providers, or 108 out of 269, expect to be in deficit in the current university financial year ending July 31, according to a May financial-sustainability report by the Office for Students, which regulates the sector.
That’s before they feel the full effect of the decline in international recruitment. The word “challenging” appears 13 times in the study.
The report modeled a series of gloomier scenarios than the forecasts provided by universities, which it described as too optimistic.
In the bleakest, overseas entrants were seen dropping 61% by 2026-27 compared with the year ending Wednesday.
That would reduce the sector’s annual net income by a cool £9.7 billion and push 226 institutions, or 84% of the total, into deficit.
Even in the mildest scenario, which posited no growth in overall student numbers through 2026-27, net income was seen falling £3.4 billion with 176 providers sinking into deficit.
