Cuts, strikes, reviews and redundancies. The start to this academic year has been one of the most chaotic yet. At swathes of universities across the country, lecturers and staff have walked out in protest at proposed plans to deal with what is increasingly becoming a crisis-ridden sector, leaving students in limbo over the quality of their education.
Plagued with funding shortfalls, the financial situation of many of our higher education institutions is bleak. Over 40% of UK universities are expecting to run deficits next year, with 105 of our 276 institutions planning some form of cuts programme to deal with the financial strain.
This apparent crisis rose to new levels when, on the 25th November, the Office for Students – the national student regulator – said that 24 universities have been placed in a high risk category of potential bankruptcy in the next 12 months, sparking speculation that a university could go bust and leave tens of thousands of students in academic limbo.
The context of the situation is one riddled with market and funding shifts. The decision of the coalition government in 2012 to triple tuition fees to £9,000 and slash grants has finally caught up with universities’ bottom lines. The sector is now grappling with the costs of running high-level research institutions on funding models built for 2012, notwithstanding the occasional tweak, with the inflation of the 2020s. The get-out clause of international students - subject to higher fees than domestic students, set by the universities themselves - has become far from a reliable method of offsetting universities’ losses. A combination of Brexit, COVID and visa restrictions has put off prospective overseas students from contributing money to the now near-bare university coffers.
In other words, our universities, financially speaking, are struggling. That’s not to say that the research quality isn’t still the envy of the world – the UK’s higher education sector still sits second in global tables – but the continuous strain of income shortfalls are beginning to mandate serious action and are prompting the reigning-in of spending that we are seeing across the country.
Some are opting for voluntary redundancies, in the hope that the numbers of staff departing will prevent harsher action in the future – an effort that seems to lead to mandatory layoffs more often than not. Others are undertaking harsher actions now, with a programme of staff redundancies, course endings and even the closures of sites present at many institutions. This isn’t just a situation affecting our smaller universities, some of our largest, of up to 50,000students, are having to take consequential actions. The University of Nottingham, with its 35,000 students, have announced the suspension of all new music and language courses. University College London, our second-largest University, with upwards of 50,000 students, has announced plans to lay off staff in their history department and reduce module offerings to students. Even the University of Edinburgh, with its supposedly more stable reliance on Scottish government grants, has not escaped the pressures of inflation and overseas losses, and is looking for £140m in savings, mainly affecting its education courses.
It is no surprise, then, that the evident financial difficulties of our universities are affecting student outlook. As well as dissatisfaction among many that fees appear high whilst our institutions struggle, recent polling shows that almost one third of students are worried about their own University going bust. A clear chunk of under and post-graduates are actively enrolled in university whilst harbouring a level of concern that one day they may not have a university to attend, as a result of severe financial strain.
In the context of the current fiscal situation, this isn’t surprising. The OfS has publicly said that more than 20 universities are being closely monitored, including one unnamed Russell Group University. This begs the question: could a university actually go bust, and what happens if one does?
It was a potential event on Keir Starmer’s crisis management list – comedically dubbed the “shit list”. Drawn up prior to the 2024 election in preparation for potential major events that a would-be Labour Government could have to contend with, it is an indicator of the evidently real fears of a university bankruptcy occurring amongst those in government.
History tells us that while such threats haven’t been as potent as they are now, there have been instances of near-bankruptcy events. University College Cardiff, for example, running a spending black hole of £20m in 1988 was facing closure after severe financial pressure. In the end, the government had to step in and provide emergency funds for its salvation. As part of that, though, it was forced to join with the Institute of Science and Technology to create what is now the University of Cardiff, saving the education of its students, but ending the existence of the university as a standalone institution.
In 2024, we got the closest we’ve been yet to a university officially going bust. The University of Dundee, under severe financial pressure, was forced to approach the Scottish Government and demand a bailout to prevent its doors shutting permanently at the end of the academic year. The £40min funding provided just about saved its students their education, but was conditional on a drastic reduction in the University’s subject offering.
Within these examples lie clues as to the likely outcome of a university on the cusp of bankruptcy and the threat of closure of its doors for good. Any university and its leadership will be starkly aware of the huge number of legal responsibilities and contracts that it must fulfil and will take any action possible to avoid a bankruptcy.
The bad news for students is that, in the occasion of such an event, the protections that they have financially are much less than the protections of others. Universities have much greater legal obligations to payback entities other than the students, such as secured creditors. Students could be expected, in the event of their university shutting its doors, to move universities and, potentially, choose another course, rather than being fully reimbursed for their fees.
Since the late November, when the OfS placed 24 universities in the high-risk category, we have heard that, should a university collapse, the regulator will work with UCAS, the admissions service, to create a bespoke clearing service to help them access an alternative University or course. What would happen with accommodation is an unknown, but there are plans in place should a worst-case scenario come to fruition.
Further good news for students, if such a thing is possible, lies in the likelihood of a bankruptcy ever actually being allowed to happen. As mentioned earlier, a university fully awake to its responsibilities would see the event of bankruptcy as an outcome to be avoided at all costs and would embark on any potential avenue possible in order to protect a university from permanent closure, and any government bailout – which would likely be demanded- would be conditional on the basis of adherence to these avenues.
What we’re seeing now - the programmes of cuts, redundancies and course closures - is the manifestation of that. Legal changes made in 2015, which enabled universities to take on as many students in any area as they wished, are an avenue being utilised on a grand scale, with hundreds-to-thousands of students being accepted onto courses of broad appeal with cheaper teaching costs – usually subjects like sociology, criminology or politics – in attempts to offset losses. The result of this is that the subjects of less appeal –modern languages, for example – take a hit when course cuts are seen as the alternative to university closure.
Another route is University mergers, something that we are also seeing now as an alternative to potential bankruptcy. The University of Greenwich and the University of Kent have announced plans to come together to form a new University in the next academic year, in an attempt to save themselves from the severe financial pressures of the modern university sector.
In any event, the OfS and the government would take a similar view to what universities have now; that forced mergers or harsh restructures involving course closures are more desirable than the shutting down of a university and the ending of students’ courses there and then.
The good news, then, is that students needn’t worry too much about their university closing its doors for good. The sight of anxious undergraduates sitting on kerbs outside their university accommodation, air fryers to one side, waiting for a transfer to the nearest city university, isn’t one currently on the horizon. The future, though, still appears to be one of near-endless battles between universities and their budgets, with courses and staff being the victims. A university going bust may not happen, but the steady erosion of universities’ excellence is now undoubtedly the sector’s default survival setting.
.svg)
James is a third year Politics and International Relations student at the University of Leicester. Interested in British politics and political parties.
.svg)
.svg)
.svg)
.svg)
.svg)
