At least three universities are on the brink of going bust with growing numbers dependent on short-term loans ‘just to survive’, experts warned last night.
They said falling numbers of 18-year-olds, increased competition for students and tighter immigration controls on foreign students are pushing universities closer to collapse.
Several institutions are being forced to rely on bridging loans to stay afloat.
Nick Hillman, director of the Higher Education Policy Institute think-tank, said: ‘A university going bust is more likely than at any other point in the last generation.
‘What is of concern is those universities that are resorting to taking out bridging loans to tide them over until their student fees come in. They are borrowing just to survive.’
It is understood that a university in the North West and two on the South Coast are under significant financial strain.
One is believed to be in talks with insolvency lawyers, the i newspaper reported.
Falling numbers of 18-year-olds, increased competition for students and tighter immigration controls on foreign students are also factors (file photo)
The removal of the cap on the number of students universities can accept has led to frenzied competition for recruits.
The trebling of tuition fees, which has discouraged some youngsters from going to university, has also played a major part.
Matt Robb, an education specialist for management consultancy EY Parthenon, said conditions had become much more difficult for universities.
‘I would say there are about three or four universities where it is possible [they could go bankrupt],’ he said.
‘They are universities that are in places that are not attractive for students to study, or they are smaller universities that are close to more popular institutions.’
Mr Robb warned that a number of universities in London were also at risk, because they have recently seen a dramatic drop in student numbers.
He said: ‘Some of them may never have been financially viable in the first place, in which case if they are about to go bust, then if there is no compelling public interest let them go bust.’
He said universities under financial strain should look to sell off land and properties to try to avoid insolvency.
Matt Waddup, head of policy and campaigns at the University and College Union, which represents teaching staff, warned that a university going under would be ‘devastating’ for the local area.
‘Along with schools and colleges, universities are the beating heart of their local communities and it is difficult to overstate just how important the spending power of staff and students is for local economies,’ he said.