First time in UK Universities' long history, serious financial trouble predicted

As per reports, the head of the biggest higher-education union in the UK has asked for an emergency rescue package to save the UK university sector from facing any financial crisis in the near future.

Study in UK: In its prolonged history of existence, any university in Britain never became bankrupt. However, now all is not that well in the sector and reports of serious financial crisis are emerging.

As per the Economic Times report, the union head in the university sector has asked for an emergency rescue package to save the looming crisis.

The funding structure of UK universities is being blamed for this situation where hardly any tuition fees increased for domestic students. In 2017, the domestic student's tuition fee was held at £9,250 ($11,925) which now increased by merely £250 in the past 12 years. Hence, the universities are highly dependent on the rich endowments to backstop US universities and other income sources. Also, these universities' funding is highly dependent on the fees collected by the international student. However, due to the the international migrant and graduate route visa debate, this year reportedly, the UK universities received fewer applications from international students which will significantly affect the sector.

"Overall, providers are forecasting deterioration in the short- to medium-term financial outlook. Their data returns show that the sector’s financial performance was weaker in 2022-23 than in 2021-22, and is expected to decline further in 2023-24, with 40 per cent of providers expecting to be in deficit and an increasing number showing low net cashflow," reads the report of May financial-sustainability by the Office for Student.

Factors challenging UK university sector

As per the report, the following are the factors which are significantly challenging the finances of the UK universities:

• Continuing decrease in the income the universities are getting and increasing liabilities such as increasing employer pension schemes, and economic pressures due to operating costs.
• High cost of living for staff and students which is affecting student recruitment.
• The recent decline in international student enrolment.
• Fee structure dependency on international students.

"Financial performance and strength vary significantly between providers. However, projections from the sector’s financial data show that an increasing number of providers will need to make significant changes to their funding model in the near future to avoid facing a material risk of closure," added the statement by May financial-sustainability report from the Office for Student.

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