Universities across England face ‘real risk’ of closure due to insolvency for first time
Universities across England face ‘real risk’ of closure due to insolvency for first time
Ellie NgTue, May 12, 2026 at 7:27 AM UTC
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The Education Committee said the government has no clear strategy for universities facing insolvency (Getty/iStock)
A university in England faces a "real risk" of closure due to insolvency for the first time, a situation MPs have warned could be "catastrophic" for students, staff, and local communities.
The Education Committee said the government has no clear strategy for universities facing insolvency as higher education institutions battle a “financial crisis”.
In a new report on higher education funding, the committee also raised concerns that current immigration policies could negatively impact the number of international students, whose fees are a crucial revenue stream for institutions.
The Office for Students (OfS), England's higher education regulator, informed cross-party MPs that it fears 24 providers are at risk of insolvency and closure within the 12 months from last November. It also said 45 per cent of higher education providers could be facing a deficit for 2025/26.
Among the 24 institutions identified as being at risk, 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 said.
“We heard compelling evidence that, without urgent and coordinated action, there is a clear possibility of a university closing.”
Among the 24 institutions identified as being at risk, seven serve more than 3,000 students each. (Alamy/PA)
It added: “While no university has ever closed in England due to insolvency, the risk is clear.
“It could have a catastrophic impact, not only on the students and staff connected with the institution, but on the wider local economy and community.”
The committee said there is currently “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 recommended the Government establish an early warning system which should set out plans for protecting students, staff and the wider community in the event of insolvency and provide a range of options on what providers can do, including restructuring, merging with another institution, direct financial support or orderly exit.
They also called on the Government to legislate to ensure insolvent institutions can continue to operate to avoid an institution having to be liquidated immediately.
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The committee found student protection plans, which should ensure students can continue and complete their studies or be compensated if a course, campus or institution closes, are “inadequate” and said the OfS must strengthen them.
The report also said the Home Office plays a “significant, even preeminent role in the financial health of the higher education sector” as international students are “heavily affected” by changes in immigration rules.
“The financial pressures on the higher education sector have driven the sector’s reliance on international students,” MPs said.
“This reliance has been directly driven by decisions of the Government.
The committee raised concerns that current immigration policies could negatively impact the number of international students (Alamy/PA)
“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.
“If the aim is to have fewer international students, the Government must set out how it will support the financial sustainability of higher education institutions.”
In figures published in January, the number of international undergraduate students who accepted a university place through Ucas increased 6.8 per cent in 2025 to 74,660 after falling slightly the year before.
Data published by the Higher Education Statistics Agency in the same month showed the total number of international students starting postgraduate degrees in the UK in 2024 fell 8 per cent from the previous year.
The Education Committee also heard “strong opposition” to the International Student Levy from the sector and is urging the Government to take on board concerns.
Universities are preparing for the introduction of the levy, which will see them charged £925 per student each year from 2028/29.
A Department for Education spokesperson said: “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.”
Source: “AOL Breaking”
