A new analysis from the Office for Students (OfS) reveals that nearly three-quarters of higher education providers in the UK could be operating with financial deficits during the 2025-26 academic year. According to the report published on Friday, the regulator indicates that as many as 72% of institutions are headed towards deficit operations based on current trends, which are primarily being fueled by a decline in student recruitment.
The OfS reports that UK undergrad and international student numbers for the 2024-25 academic year have been much weaker than expected: UK entrants down 10% and international entrants 23% less than forecast. UK undergraduate acceptances only rose modestly 1.3% for 2024 compared to the previous year, though is still far from an expected advance of 5.8%. International student visa applications have also tumbled 16% against last year, 2023, and also enrollment from places like Nigeria and Bangladesh.
This trend in recruiting fewer students than expected is going to lead to an estimated net annual loss of £3.4 billion across the sector. OfS Chief Executive Susan Lapworth warned that many institutions are struggling to meet recruitment targets, and the financial challenges are more severe than previously forecasted. Despite the concerning outlook, the report does not predict widespread university closures in the short term but emphasizes that institutions must act now to secure long-term sustainability.
The financial strain comes amid broader sector challenges, including the erosion of real-term value in tuition fees due to inflation, which has fallen by approximately a third over the last decade. In response, Education Secretary Gillian Keegan announced a rise in tuition fees to £9,535 for the 2024-25 academic year to help secure the future of higher education.
Vivienne Stern, Chief Executive of Universities UK, called the OfS’s findings a source of serious concern stressing the need for both universities and governments to work together on a longer-term solution to ensure the sector’s stability and growth.
