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July 2025 - Education

Four in 10 Universities in England are braced for a financial deficit in 2025, according to latest research: According to the higher education regulator, the Office for Students (OfS), over two-fifths (44%) of universities are projected to report a deficit in 2025. This is an increase from the 40% of institutions that anticipated an imbalance of expenses over income for the 2023/24 academic year; and this expectation comes despite universities taking actions such as removing courses, selling buildings and other assets, and cutting jobs.

The OFS analysed financial data submitted by 270 higher education providers (excluding colleges) up to January 2025 and found that 118 providers forecast they will be in deficit in 2024-25. The three primary reasons for this prediction are: costs exceeding income, a decrease in income from international students, and a greater dependence on borrowing despite dwindling cash reserves.

The report shows that although student numbers have remained relatively stable, the unit of resource - the annual amount institutions receive to educate a domestic student - has fallen in real terms due to tuition fees being frozen at £9,250 since 2017, while costs (particularly staff and energy) have continued to rise over that period.

International students provide a critical income stream for many higher education institutions. However, the report highlights that the tightening of visa regulations, particularly for dependents, changes to immigration policy, increased global competition from competitor countries and the rising cost of living have conspired to make studying in the UK less attractive to overseas students, while at the same time, pricing out prospective students, especially from developing nations. According to feedback from institutions surveyed, many expect to see a decline in the number of international students studying at their facilities.

Furthermore, the report emphasises how some universities are facing increasing financial pressure due to higher borrowing and shrinking cash reserves. As income growth slows — largely as a result of the freeze on tuition fees — and expenses such as maintenance and building costs rise, more institutions are depending on loans merely to cover their daily operations. Additionally, these institutions report that their inability to maintain existing estates will have a detrimental impact on the student experience.

Philippa Pickford, Director of Regulation at the OfS, said at a press conference: “The sector is forecasting a third consecutive year of decline in financial performance, with more than four in 10 institutions expecting a deficit this year. We still do not expect to see multiple university closures in the short-term. But the medium-term pressures are significant, complex, and ongoing”.

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