Many English universities are taking excessive financial risks that threaten their own survival and that of others in the sector, according to a report by the Higher Education Policy Institute (Hepi). The thinktank warns that high levels of borrowing, rapid expansion of student numbers, over-reliance on international students, and growth of franchised provision are putting the sector at risk.
The report highlights Canterbury Christ Church University, which has almost tripled in size over the last decade, and Arden University, a private institution that has seen a more than thirtyfold increase. On international students, Hepi is concerned about universities that bulk recruit from individual countries, such as China and India, leaving them exposed to volatility in the global recruitment market.
Excessive borrowing is another key risk, with the University of Northampton having debts equivalent to 137% of its annual income. The report also criticises the huge increase in first-class degrees awarded, which it says 'strongly suggests some providers are willing to use generous final grades as a marketing tool'.
The higher education sector is facing severe financial challenges, with fewer international students due to stricter visa rules and many universities cutting jobs and courses. The Office for Students reported in November that nearly half of institutions in England were facing deficits.
Hepi's report, 'A Degree of Regulation', urges the government to introduce new measures, including limiting annual growth in student numbers to 5%, requiring universities to hold capital buffers and meet minimum liquidity requirements, and standardising degree classifications to cap firsts at 15% and 2:1s at 35%.
Universities UK said it is essential for the government to work with universities to put them on a sustainable financial footing, while a Department for Education spokesperson stated that universities are independent but the government is committed to fixing the foundations of higher education.
