Universities across England face ‘real risk’ of closure due to insolvency for first time

A UK university faces “real risk of closure” due to insolvency for the first time; MPs warned the situation could be “catastrophic” for students, staff and local communities.

The Education Committee said the government had no clear strategy for universities facing insolvency as higher education institutions struggled with a “financial crisis”.

In a new report on higher education financing, the committee also expressed concerns that current immigration policies could negatively impact the number of international students whose fees are a key source of revenue for institutions.

England’s higher education regulator, the Office for Students (OfS), has told cross-party MPs it fears 24 providers are at risk of insolvency and closure within 12 months from last November. It was also stated that 45 per cent of higher education providers could face deficits in 2025/26.

Seven of the 24 institutions identified as at risk each serve more than 3,000 students.

“The higher education sector in England now faces a financial crisis that poses a real risk of institutional insolvency,” the committee said.

“We have heard compelling evidence that without urgent and coordinated action, the possibility of a university closure is clear.”

He added: “Although no university has closed due to insolvency in England, the risk is clear.

“This could have a devastating impact not only on the students and staff associated with the institution, but also on the wider local economy and society.”

The committee noted that there is currently no “clearly understood protocol for how the Government might respond to the situation of a provider facing imminent risk of insolvency”, describing this as a “very serious problem”.

MPs recommended the Government establish an early warning system, which should set out plans to protect students, staff and the wider community in the event of insolvency and provide a range of options for what providers can do, including restructuring, merging with another institution, direct financial support or orderly exit.

They also called on the Government to enact legislation to ensure that insolvent institutions can continue their operations to prevent the immediate liquidation of an institution.

The committee found that student protection schemes to ensure students can continue and complete their studies or receive compensation if a course, campus or institution closes were “inadequate” and said the OfS should strengthen them.

The report also said the Home Office played “a significant, even predominant, role in the financial health of the higher education sector” as international students were “severely affected” by changes to immigration rules.

“Financial pressures on the higher education sector have increased the sector’s dependence on international students,” the MPs said.

“This confidence stems directly from the Government’s decisions.

“Immigration policies have a very significant impact on the higher education sector and the Government must jointly consider the consequences of its decisions.

“If the aim is to have fewer international students, the Government must determine how to support the financial sustainability of higher education institutions.”

The number of international undergraduate students placed at university through Ucas rose by 6.8 per cent to 74,660 in 2025, after a slight decline the previous year, according to figures published in January.

Data published by the Higher Education Statistics Agency in the same month showed that the number of international students starting postgraduate studies in the UK in 2024 dropped by 8 percent compared to the previous year.

The Education Committee also heard “strong opposition” from the sector to the International Student Fee and is calling on the Government to consider concerns.

Universities are set to introduce the levy, which will charge £925 per student per year from 2028/29.

A Department for Education spokesman said: “We have taken action to put the sector on a secure financial footing, including increasing the annual tuition fees cap and refocusing the Office for Students on supporting the financial stability of universities.

“Through our ambitious reforms announced in the Post-16 Education and Skills White Paper, we will make universities engines of growth, ambition and opportunity.

“We will carefully consider the thoughtful recommendations in the committee’s report and respond in due course.”