Significant challenges continue to face higher education finances – with nearly half facing deficits in 2025-26

The report updates the OfS’s annual financial sustainability report, which was published in May 2025, taking into account early information about the number of UK and international students who entered higher education this autumn. It reports on increased recruitment across the sector as a whole for both UK and international students. On student recruitment, the report finds:

• Acceptances of UK undergraduate students through UCAS have grown by 3.1 per cent in 2025 compared with the same point in 2024, though this remains below the sector’s forecast growth of 4.1 per cent.
• The overall growth in UK recruitment is driven by larger research-intensive and medium-sized institutions. This has led to significant variation across this sector, with many individual providers not meeting their recruitment expectations, although there are initial signs of more prudent admissions forecasts across the sector.
• Indications from Home Office data suggest that international student recruitment has returned to year-on-year growth after the significant decline in visa applications in 2024, though the number of visas issued is still significantly below those issued in 2023. Data shows an overall increase of 6.4 per cent in the number of Confirmation of Acceptance for Studies (CAS) issued in the period before the September intake.

There remains significant variation in the sector, both in terms of overall financial performance and student recruitment. Without mitigating actions, 124 institutions, representing 45 per cent of those included in the analysis face a deficit in 2025-26. This has increased from 34 per cent from provider forecasts in May.

Commenting on the analysis, Philippa Pickford, Director of Regulation at the OfS, said:

‘While increased student recruitment is positive news, this report shows the continuing challenges facing the higher education sector. Universities now have welcome clarity over tuition fee levels in future years, and we also know that many institutions are continuing to take significant steps to cut costs, work collaboratively with partners and seek opportunities for realistic growth. They are also becoming more realistic and prudent in their planning, including tempering ambitions for recruitment that are too optimistic.

‘But nobody should be under any illusion that the challenges that have gripped the sector in recent years have evaporated. The tough decisions many institutions have taken have certainly made a difference but we still predict that significant numbers of universities will face deficits by the end of 2025-26. A smaller proportion also face liquidity problems, with our modelling projecting nearly one in six institutions will have less than 30 days’ liquidity. Some universities continue to base their forecasts on unrealistic expectations of growth, while others are taking short-term measures rather than tackling transformational changes needed to right-size their businesses. It continues to be our assessment that we do not expect multiple universities to close in the short term. But some institutions need to take radical action, which might include considering different structures or business models.

‘The OfS will continue to assess and analyse financial sustainability for individual institutions and for the sector as a whole. We continue to engage with partners, including sector representative bodies, financial experts, lenders and audit firms to discuss the risks facing the sector and the important role that effective governance and leadership play in addressing these challenges. Where an institution runs into financial problems, we will work closely with it to ensure students are properly protected and that our world-renowned higher education sector continues to flourish.’

Notes

1. The Office for Students is the independent regulator for higher education in England. We are striving to deliver exemplary regulation in the interests of students. Find out more about our new strategy.
2. Alongside this press release, the OfS is publishing ‘Financial sustainability of higher education providers in England: November 2025 update’.