Universities across England are confronting a "real risk" of closure due to insolvency for the first time, a situation that Members of Parliament have described as potentially "catastrophic" for students, staff, and local communities. The Education Select Committee has released a new report highlighting that the government lacks a clear strategy for dealing with financially struggling higher education institutions amid a deepening financial crisis.
Financial Crisis and Risk of Insolvency
The report, which examines higher education funding, reveals that the Office for Students (OfS), England's higher education regulator, has identified 24 providers that are at risk of insolvency and closure within the 12 months from November 2025. Additionally, 45% of higher education providers could face a deficit for the 2025/26 academic year. Among the 24 at-risk institutions, seven serve more than 3,000 students each.
"The higher education sector in England is facing a financial crisis that now poses a real risk of institutional insolvency," the committee stated. "We heard compelling evidence that, without urgent and coordinated action, there is a clear possibility of a university closing." The committee added that while no university in England has ever closed due to insolvency, the threat is unmistakable and could have severe repercussions for local economies and communities.
Lack of Government Strategy
The committee expressed serious concern that there is "no clearly understood protocol for how the Government might respond to a situation of a provider at risk of imminent insolvency," calling it "a very serious problem." MPs have recommended that the government establish an early warning system to protect students, staff, and communities in the event of insolvency. This system should outline options such as restructuring, mergers, direct financial support, or orderly exit. They also urged the government to legislate to allow insolvent institutions to continue operating temporarily, preventing immediate liquidation.
Student Protection Plans Inadequate
The report found that current student protection plans, which are meant to ensure students can continue their studies or receive compensation if a course, campus, or institution closes, are "inadequate." The committee called on the OfS to strengthen these plans to better safeguard students.
Impact of Immigration Policies
The committee also raised concerns about the impact of immigration policies on international student numbers, as their fees are a crucial revenue source for universities. "The financial pressures on the higher education sector have driven the sector’s reliance on international students," MPs said. "Immigration policies have a very significant effect on the higher education sector, and the Government must consider the consequences of its decisions in a joined-up way."
Data from January 2026 shows that international undergraduate acceptances through Ucas increased by 6.8% in 2025 to 74,660, following a slight decline the previous year. However, the number of international postgraduate students starting in the UK fell by 8% in 2024 compared to 2023. The committee heard "strong opposition" to the International Student Levy, which will charge universities £925 per international student per year from 2028/29, and urged the government to reconsider.
Government Response
A Department for Education spokesperson responded: "We have taken action to put the sector on a secure financial footing, including raising the maximum cap on tuition fees annually and refocusing the Office for Students to support universities’ financial stability. Through our ambitious reforms announced in the Post-16 Education and Skills White Paper, we will restore universities as engines of growth, aspiration and opportunity. We will carefully consider the thoughtful recommendations in the Committee’s report and respond in due course."
