Clearing system to rescue students whose universities go bust
Some universities in England are millions of pounds in deficit and said to be at risk of collapse. Dundee University was given a £22 million bailout by the Scottish government in June, with a pledge of a further £40 million if a credible restructuring plan can be agreed.
The Office for Students (OfS), the university regulator for England, is drawing up plans to redistribute students at any institutions that go under.
• A-level results day 2025: full guide to Ucas clearing
Baroness Smith of Malvern, the skills minister, told The Times: 'I don't want to see any university in a position where it risks having to close but if that were to be the case, the priority would be the continuity of study for students.'
She confirmed plans to set up a system akin to clearing, used by school-leavers to find university places. 'I don't think this [closure] should happen but students could not just, part-way through a course, not be able to complete it,' she said.
The OfS said in its business plan for the next academic year: 'We will engage with Ucas [the admissions service] on the potential for a bespoke clearing system for students in the case of the closure of their provider.'
The OfS said it would oversee cases where there is a significant risk of institutional closure and put in place 'student protection directions'. It would work with universities and the government to implement a 'validator of last resort' for students if a university closes, such as having another one validate their degrees.
OfS analysis suggests 43 per cent of English universities will prove to have been in deficit in 2024-25. Experts and insiders have warned that some are in a very precarious position.
Domestic tuition fees will rise by £285 a year this year, the first increase since 2017. The number of international students, who pay much higher fees, has have fallen sharply, depriving universities of critical income.
Universities say they face rising costs, including the support struggling students, maintaining their estate and the rise in employers' national insurance contributions. Thousands of academics have been made redundant in the past year.
Smith said the financial challenge in higher education had been ignored by the last government for too long, prompting her to ask the OfS to prioritise financial sustainability.
Of tuition fees increasing to £9,535, she said: 'Obviously it is an increased investment that we're asking students to make but there's even more that we can do to be clear to people that this is very different from any other loan that you will have in your life. The benefit of your higher education will in almost every circumstance outweigh the cost of repaying your loan.'
The government said in May that universities would be named and shamed if they gave vice-chancellors big pay packages while delivering poor outcomes for students.
Smith added: 'It's a tough old job running a university but as with any other part of the public sector — or near public sector — you also have a responsibility, particularly at a time when you may be making others in the place redundant, to be sensible about what the senior leadership is being paid.
'I wouldn't expect a vice-chancellor to be making a plea for poverty and financial challenge while at the same time not recognising it in their own pay.'
Ministers are considering a 6 per cent levy on international students, which comes after changes in visa rules led to a downturn in overseas applicants. Universities say this will cost them millions of pounds in lost revenue.
Asked about the message to international students, Smith, who was home secretary under Gordon Brown, said: 'I think we already are very welcoming. We have a world-class higher education system, we have a good deal for international students.
'What we'll be clear about is that if you're coming to the UK to study you will be the brightest and the best and you'll be coming to take advantage of our higher education system, not to take advantage of our immigration system.'
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