As the higher education sector in England gets deeper into the metaphorical financial woods, the frequency of OfS updates on the sector’s financial position increases apace.
Today’s financial sustainability bulletin constitutes an update to the regulator’s formal annual assessment of sector financial sustainability published in May 2025. The update takes account of the latest recruitment data and any policy changes that could affect the sector’s financial outlook that would not have been taken into account at the point that providers submitted their financial returns to OfS ahead of the May report.
Recruitment headlines
At sector level, UK and international recruitment trends for autumn 2025 entry have shown growth by 3.1 per cent and 6.3 per cent respectively. But this is still lower than the aggregate sector forecasts of 4.1 per cent and 8.6 per cent, which OfS estimates could result in a total sector wide net loss of £437.8m lower than forecast tuition fee income. “Optimism bias” in financial forecasting might have been dialled back in recent years following stiff warnings from OfS, but these figures suggest it’s still very much a factor.
Growth has also been uneven across the sector, with large research intensive institutions increasing UK undergraduate numbers at a startling 9.9 per cent in 2025 (despite apparently collectively forecasting a modest decline of 1.7 per cent), and pretty much everyone else coming in lower than forecast or taking a hit. Medium-sized institutions win a hat tip for producing the most accurate prediction in UK undergraduate growth – actual growth of 2.3 per cent compared to projected growth of 2.7 per cent.
The picture shifts slightly when it comes to international recruitment, where larger research-intensives have issued 3.3 per cent fewer Confirmations of Acceptance of Studies (CAS) against a forecasted 6.6 per cent increase, largely driven by reduction in visas issued to students from China. Smaller and specialist institutions by contrast seem to have enjoyed growth well beyond forecast. The individual institutional picture will, of course, vary even more – and it’s worth adding that the data is not perfect, as not every student applies through UCAS.
Modelling the impact
OfS has factored in all of the recruitment data it has, and added in new policy announcements, including estimation of the impact of the indexation of undergraduate tuition fees, and increases to employers National Insurance contributions, but not the international levy because nobody knows when that is happening or how it will be calculated. It has then applied its model to providers’ financial outlook.
The headline makes for sombre reading – across all categories of provider OfS is predicting that if no action were taken, the numbers of providers operating in deficit in 2025–26 would rise from 96 to 124, representing on increase from 35 per cent of the sector to 45 per cent.
Contrary to the impression given by UK undergraduate recruitment headlines, the negative impact isn’t concentrated in any one part of the sector. OfS modelling suggests that ten larger research-intensive institutions could tip into deficit in 2025–26, up from five that were already forecasting themselves to be in that position. The only category of provider where OfS estimates indicate fewer providers in deficit than forecast is large teaching-intensives.
The 30 days net liquidity is the number you need to keep an eye on because running out of cash would be much more of a problem than running a deficit for institutional survival. OfS modelling suggests that the numbers reporting net liquidity of under 30 days could rise from 41 to 45 in 2025–26, with overall numbers concentrated in the smaller and specialist/specialist creative groups.
What it all means
Before everyone presses the panic button, it’s really important to be aware, as OfS points out, that providers will be well aware of their own recruitment data and the impact on their bottom line, and will have taken what action they can to reduce in-year costs, though nobody should underestimate the ongoing toll those actions will have taken on staff and students.
Longer term, as always, the outlook appears sunnier, but that’s based on some ongoing optimism in financial forecasting. If, as seems to keep happening, some of that optimism turns out to be misplaced, then the financial struggles of the sector are far from over.
Against this backdrop, the question remains less about who might collapse in a heap and more about how to manage longer term strategic change to adapt providers’ business models to the environment that higher education providers are operating in. Though government has announced that it wants providers to coordinate, specialise and collaborate, while the sector continues to battle heavy financial weather those aspirations will be difficult to realise, however desirable they might be in principle.
UK universities face an increasingly constrained financial landscape. Across all four nations, domestic undergraduate tuition fees are regulated and have failed to keep pace with rising costs. In England, the cap is currently £9,535 and, following the UK Government’s recent announcement, will rise annually in line with inflation from 2026, with eligibility linked to standards. This modest change does little to reverse years of real-terms decline, leaving much of the UK’s undergraduate teaching provision structurally loss-making. In Wales, fees remain capped at £9,535; in Northern Ireland they are £4,855; and for Scottish-domiciled students studying in Scotland, there are no tuition fees at all.
In this environment, attention naturally turns to those parts of university income that are unregulated, most notably fees for international students and postgraduate programmes. Master’s fees for home students are unregulated in all four nations, and universities are free to set their own international tuition rates.
Much of the public debate has focused on the fee levels charged by some higher-ranked universities and the narrative that international students subsidise domestic education and research. While this is certainly true for many institutions, it is far from universal.
Once scholarships, discounts, agent commissions and other costs of acquisition are deducted, the margins on international student recruitment can be modest, and sometimes non-existent. For a growing number of institutions, particularly those struggling to fill domestic places, international recruitment at low net revenue levels has become a way of keeping the lights on. Better, in some cases, to have some income to cover fixed costs than none at all.
But this is not a sustainable strategy. If international recruitment is to continue underpinning the financial viability of UK universities, much greater attention needs to be paid to pricing strategy.
The price–profit relationship
CIL Management Consultants recently analysed how UK universities can use pricing more strategically to support growth and profitability. Their work highlights just how powerful pricing can be as a financial lever compared with more commonly pursued strategies such as chasing volume or cutting costs.
Their analysis included an illustrative calculation based on a scenario where a university charges tuition fees of £25,000 per international student, enrols 50 students on the course, and incurs a cost of acquisition of £4,000 per student (including scholarships, discounts and agent commissions).
Under this model, a 5% increase in tuition fees would generate around a 6% uplift in profit, outpacing the gains from a 5% rise in enrolments (around 5%) or a 5% reduction in acquisition costs (around 1%). In other words, price is the strongest profit lever available to universities.
Despite this, most institutions have historically set their international and postgraduate fees through incremental adjustments or by reference to competitors’ published fees, often without examining what those institutions actually charge in practice, and with little systematic consideration of how those fees influence volume, cost, and overall margin.
Understanding the margin challenge
CIL’s work also reinforces what many sector leaders already know: margins are being squeezed from all directions.
Capped domestic fees leave undergraduate teaching structurally loss-making for many institutions.
Rising operational costs, particularly staff, energy, and estates, continue to erode surpluses.
High fixed cost bases limit flexibility, with cuts risking reductions in quality or capacity.
In this context, the international market has become the pressure valve. But unless pricing is managed strategically, even international markets will fail to deliver the surpluses universities depend upon.
Three levers for strategic pricing
CIL identify three main levers universities can use to improve pricing power and strengthen their financial position:
Premium to domestic tuition fees: establishing deliberate price differentials that reflect a university’s strategic positioning, course value, and market dynamics. Currently, most universities operate with only a few broad fee bands, typically with humanities and much of the social sciences in the lowest band, lab-based subjects higher, and business or MBA programmes at the top.
A true pricing strategy would be far more nuanced. It would use evidence on student demand, graduate outcomes, and perceived market value to differentiate pricing across and within disciplines, rather than relying on legacy bands. Some programmes could justifiably command greater premiums; others might need lower pricing to maintain competitiveness or support diversity.
Cost of acquisition: developing clear internal pricing rules to manage scholarships, discounts, and agent commissions. For many institutions, these often-hidden costs now absorb a significant share of international tuition income. Transparent frameworks for managing these levers are essential to protect margins.
Responsive pricing: using dynamic adjustments during the application and enrolment cycle to optimise both numbers and yield. This approach, widely used in other sectors, allows universities to flex pricing and incentives in response to market performance, course capacity, and demand signals.
When applied together, these levers can transform a reactive pricing approach into a proactive, strategic tool for sustainability.
From volume to value
The sector’s dominant mindset has too often been volume-driven: more international students, more income. Yet volume without margin is a dangerous illusion of success. CIL’s analysis reminds us that an overreliance on high-volume, low-margin recruitment can rapidly undermine financial resilience, particularly when acquisition costs are rising.
Strategic pricing, by contrast, focuses on value, identifying where universities can sustain premiums, where scholarships genuinely drive conversion, and where cost reductions can be achieved without compromising quality or reputation.
This is not simply a commercial exercise. It’s about ensuring that the financial model underpinning UK higher education remains viable enough to support teaching, research, and public value in the long term.
Making pricing strategic
For universities, developing a coherent pricing strategy means integrating finance, recruitment, marketing, and academic planning functions around shared objectives. It also means looking across all offerings to ensure fee levels reflect the real value, demand, and cost to deliver each programme.
Above all, it requires cultural change. Pricing cannot be left to annual cycles of incremental uplifts or reactive discounts. It needs to become a core component of institutional strategy linked to brand, market position, and mission.
Pricing for purpose and sustainability
Price should not be treated as a purely commercial consideration or an uncomfortable topic best left to finance teams. It is a strategic tool that, when used intelligently, can help universities balance their academic mission with financial sustainability.
A well-designed pricing strategy can sustain access by ensuring that scholarships and discounts are targeted where they make the greatest difference; it can maintain quality by protecting the resources needed to deliver excellent teaching and research; and it can enable innovation by generating the headroom for new programmes, partnerships and investment.
Reframing price as part of a university’s purpose, rather than as an administrative exercise or a market reaction, allows institutions to align financial decisions with their educational and societal goals. It invites governing bodies and senior leaders to ask not just what can the market bear, but what price best reflects the value we deliver, the students we want to attract, and the impact we want to have?
If the UK sector is to thrive amid constrained funding and rising costs, it must learn to price with both principle and precision. Getting price right is not about maximising income; it is about ensuring that universities remain able to deliver their mission sustainably for the long term.
July 28, 2025, by Dr. Chet Haskell: The headlines are full of uncertainty for American higher education. “Crisis” is a common descriptor. Federal investigations of major institutions are underway. Severe cuts to university research funding have been announced. The elimination of the Department of Education is moving ahead. Revisions to accreditation processes are being floated. Reductions in student support for educational grants and loans are now law. International students are being restricted.
These uncertainties and pressures affect all higher education, not just targeted elite institutions. In particular, they are likely to exacerbate the fragility of smaller, independent non-profit institutions already under enormous stress. Such institutions, some well-known, others known only locally, will be hard hit particularly hard by the combination of Trump Administration pressures and the developing national demographic decline for traditional-age students.(https://www.highereddive.com/news/decline-high-school-graduates-demographic-cliff-wiche-charts/738281/) These small colleges have been a key element of the American higher education scene, as well as for numerous local communities, for many decades.
It is widely understood that the vibrancy of American higher education comes, in part, from the diversity of its institutions and educational goals. The rich mixture of American colleges and universities is a strength that many other nations lack. Students have opportunities to start and stop their educations, to change directions and academic goals, to move among different types of institutions.
Smaller undergraduate colleges play important roles in this non-systemic system. They provide focused educational opportunities for younger adults, where they can build their lives on broad principles. Impressively large percentages of small college graduates go on to graduate education for various professions. Small colleges provide large numbers of graduates who enter PhD programs and eventually enter the professorate.
There are approximately 1179 accredited private institutions with enrollments of fewer than 3000 students. Of these, 185 have between 3000 and 2000 students. Another 329 have enrollments below 2000 but above 1000. A final 650 institutions have enrollments below 1000. These 1179 institutions students include few wealthy colleges such as Williams, Amherst, Carleton or Pomona, as well as numerous struggling, relatively unknowns.
A basic problem is one of scale. In the absence of significant endowments or other external support, it is very difficult to manage small institutions in a cost effective manner. Institutions with enrollments below 1000 are particularly challenged in this regard. The fundamental economics of small institutions are always challenging, as most are almost completely dependent on student enrollments, a situation getting worse with the coming decline of traditional college age students. There are limited options available to offset this decline. Renewed attention to student retention is one. Another is adding limited graduate programs. However, both take investment, appropriate faculty and staff capacity and time, all of which are often scarce.
These institutions have small endowments measured either in total or per student value. Of the 1179. There are only 80 with total endowments in excess of $200 million. While a handful have per student endowments that rival the largest private universities, (Williams, Amherst and Pomona all have per student endowments in excess of $1.8 million), the vast majority have per student endowments in the $40,000 range and many far less.
Most of these schools have high tuition discount rates, often over 50%, so their net tuition revenue is a fraction of posted expense. They are all limited by size – economies of scale are difficult to achieve. And most operate in highly competitive markets, where the competition is not only other small schools, but also a range of public institutions.
So, what is the underendowed, under resourced small college to do?
The most common initiatives designed to address these sorts of challenges are consortia, collaborative arrangements among institutions designed to increase student options and to share expenses. There are numerous such arrangements, examples being the Colleges of the Fenway in Boston, the Five Colleges of Western Massachusetts, the Washington DC Metropolitan Area Consortium, and the Claremont Colleges in California, among others.
The particulars of each of these groups differ, but there are commonalities. Most are geographically oriented, seeking to take advantage from being near each other. Typically, these groups want to provide more opportunities for students through allowing cross-registrations, sharing certain academic programs or joint student activities. They usually have arrangements for cost-sharing or cost reductions through shared services for costs like security services, IT, HR, risk management options, pooled purchasing and the like. In other cases (like the Claremont Consortium) they may share libraries or student athletic facilities. Done well, these arrangements can indeed reduce costs while also attracting potential students through wider access to academic options.
However, it is unlikely that such initiatives, no matter how successful, can fundamentally change the basic financial situation of an independent small college. Such shared services savings are necessary and useful, but usually not sufficient to offset the basic enrollment challenge. The financial impact of most consortia is at the margins.
Furthermore, participating institutions have to be on a solid enough financial basis to take part in the first place. Indeed, a consortium like Claremont is based on financial strength. Two of the members have endowments in excess of $1.2 billion (Pomona’s is $2.8 billion.) The endowments of the others range from a low of $67 million (Keck Graduate with 617 students) to Scripps with $460 million for 1100 students.) The Consortium is of clear value to its members, but none of these institutions is on the brink of failure. Rather, all have strong reputations, a fact that provides another important enrollment advantage.
One important factor in these consortia arrangements is that the participating institutions do not have to give up their independence or modify their missions. Their finances, alumni and accreditation are separate. And while the nature of the arrangement indicates certain levels of compromise and collaboration, their governance remains basically unchanged with independent fiduciary boards.
At the other end of the spectrum are two radically different situations. One is merging with or being acquired by another institution. Prep Scholar counts 33 such events since 2015. (https://blog.prepscholar.com/permanently-closed-colleges-list). Lacking the resources for financial sustainability, many colleges have had no choice but to take such steps.
Merging or being acquired by a financially stronger institution has many advantages. Faculty and staff jobs may be protected. Students can continue with their studies. The institution being acquired may be able to provide continuity in some fashion within the care of the new owner. Endowed funds may continue. The institution’s name may continue as part of an “institute” or “center” within the new owner’s structure. Alumni records can be maintained. Real estate can be transferred. Debts may be paid off and so forth. There are multiple examples of the acquiring institution doing everything possible along these lines.
But some things end. Independent governance and accreditation cease as those functions are subsumed by the acquiring institution. Administrative and admissions staffs are integrated and some programs, people and activities are shed. Operational leadership changes. And over time, what was once a beloved independent institution may well fade away.
The end of a college is a very sad thing for all involved and, indeed, for society in general. Often a college is an anchor institution in a small community and the loss is felt widely. The closure of a college is akin to the closure of a local factory. As Dean Hoke and others have noted, this is a particular problem for rural communities.
Are there other possible avenues, something between a consortium and a merger or outright closure?
One relatively new model has been organized by two quite different independent institutions, Otterbein University and Antioch University, that came together in 2022 to create the Coalition for the Common Good. Designed to be more than a simple bilateral partnership, the vision of the Coalition is eventually to include several institutions in different locations linked by a common mission and the capacity to grow collective enrollments.
At its core, the Coalition is based on academic symbiosis. Otterbein is a good example of the high-quality traditional undergraduate residential liberal arts institution. It has been well-run and has modest financial resources. Facing the demographic challenges noted earlier (in a state like Ohio that boasts dozens of such institutions), it developed a set of well-regarded graduate programs, notably in nursing and health-related fields, along with locally based teacher education programs and an MBA. However, despite modest success, they faced the limitations of adult programs largely offered in an on-campus model. Regardless of quality, they lacked the capacity to expand such programs beyond Central Ohio.
Antioch University, originally based in Ohio, had evolved over the past 40 years into a more national institution with locations in California, Washington State and New Hampshire offering a set of graduate professional programs to older adults mostly through distance modalities in hybrid or low-residency forms. Antioch, however, was hampered by limited resources including a very small endowment. It had demonstrated the capacity to offer new programs in different areas and fields but lacked the funds necessary for investment to do so.
Within the Coalition, the fundamental arrangement is for Antioch to take over Otterbein’s graduate programs and, with Otterbein financial support, to expand them in other parts of the country. The goal is significant aggregate enrollment growth and sharing of new revenues. While they plan a shared services operation to improve efficiencies and organizational effectiveness, their primary objective is growth. Antioch seeks to build on Otterbein’s successes, particularly with nursing programs. It already has considerable experience in managing academic programs at a distance, a fact that will be central as it develops the Otterbein nursing and health care programs in a new Antioch Graduate School of Nursing and Health Professions.
It is assumed that additional new members of the Coalition will resemble Otterbein in form, thus further increasing opportunities for growth through enhanced reach and greater scale. New members in other geographic locations will provide additional opportunities for expansion. One early success of the Coalition has been the capacity to offer existing Antioch programs in Central Ohio, including joint partnerships with local organizations, health care and educational systems. Crucially, both institutions remain separately accredited with separate governance and leadership under a Coalition joint “umbrella” structure.
This is not to assert that this model would work for many other institutions. First, many schools with limited graduate programs will be reluctant to “give up” some or all these programs to another partner in the same fashion as Otterbein has with Antioch. Others may not fit geographically, being too remote for expansion of existing programs. Still others may not wish to join a group with an avowed social justice mission. Finally, as with some consortia, the Coalition arrangement assumes a certain degree of institutional financial stability – it cannot work for institutions on the brink of financial disaster, lest the weakest institution drag down the others.
Are there other organizational variants that are more integrated than consortia, but allow the retention of their independence in ways impossible in a merger or acquisition model? What can be learned from the Coalition initiative that might help others? How might such middle-ground collaboration models be encouraged and supported?
How can philanthropy help?
This is an opportunity for the segments of the philanthropic world to consider possible new initiatives to support the small college elements of the education sector. While there will always be efforts to gain foundation support for individual colleges, there will never be enough money to buttress even a small portion of deserving institutions that face the financial troubles discussed above
Philanthropy should take a sectoral perspective. One key goal should be to find ways to support smaller institutions in general. Instead of focusing on gifts to particular institutions, those interested in supporting higher education should look at the multiple opportunities for forms of collaborative or collective action. Central to this effort should be exploration of ways of supporting diverse collaborative initiatives. One example would be to provide sufficient backing to a struggling HBCU or women’s college to enable it to be sufficiently stable to participate in a multi-institutional partnership.
As noted, institutional consortia are well established as one avenue for such collaboration. Consortia have existed for many years. There are consortia-based associations that encourage and support consortia efforts. However, every consortium is unique in its own ways, as participating institutions have crafted a specific initiative of a general model to meet their particular situations and need. Consortia can be important structures for many institutions and should be encouraged.
But there is a large middle ground between consortia arrangements and mergers and acquisitions. The Coalition for the Common Good is but one such arrangement and it is still in its early stages. What has been learned from the experience thus far that might be of use to other institutions and groups? How might this middle ground be explored further for the benefit of other institutions?
One thing learned from the Coalition is the complexity of developing a new model for collective action. Antioch and Otterbein separately pursued individual explorations of options for two or more years before determining that their partnership together should move forward. It then took a full year to get to the point of announcing their plans and another year to complete negotiations and sign completed legal documents and to obtain the necessary accreditor, regulator and Department of Education approvals. The actual implementation of their plans is still in a relatively early stage. In short, it takes time.
It also takes tremendous effort by leadership on both sides, as they must work closely together while continuing to address the daily challenges of their separate institutions. Everyone ends up with at least two major jobs. Communication is vital. Boards must continue to be supportive. The engagement of faculty and staff takes time and can be costly.
What is often referred to as “fit” – the melding of cultures and attitudes at both the institutional and individual levels – is essential. People must be able to work together for shared goals. The burdens of accreditation, while necessary, are time-consuming and multifaceted. There are many things that can go wrong. Indeed, there are examples of planned and announced mergers or collaborations that fall apart before completion.
Philanthropic institutions could support this work in numerous ways, first for specific initiatives and then for the sector, by providing funding and expertise to facilitate new forms of coalitions. These could include:
Providing financial support for the collaborative entity. While participating institutions eventually share the costs of creating the new arrangement, modest dedicated support funding could be immensely useful for mitigating the impact of legal expenses, due diligence requirements, initial management of shared efforts and expanded websites.
Providing support for expert advice. The leaders of two institutions seeking partnership need objective counsel on matters financial, legal, organizational, accreditation and more. Provision of expertise for distance education models is often a high priority, since many small colleges have limited experience with these.
Funding research. There are multiple opportunities for research and its dissemination. What works? What does not? How can lessons learned by disseminated?
Supporting communication through publications, workshops, conferences and other venues.
Developing training workshops for boards, leadership, staff and faculty in institutions considering collaborations.
Crafting a series of institutional incentives through seed grant awards to provide support for institutions just beginning to consider these options.
These types of initiatives might be separate, or they might be clustered into a national center to support and promote collaboration.
These and other ideas could be most helpful to many institutions exploring collaboration. Above all, it is important to undertake such explorations before it is too late, before the financial situation becomes so dire that there are few, if any, choices.
Conclusions
This middle ground is not a panacea. The harsh reality is that not all institutions can be saved. It takes a certain degree of stability and a sufficient financial base to even consider consortia or middle ground arrangements like the Coalition for the Common Good. Merging with or being acquired by stronger institutions is not a worst-case scenario – there are often plenty of reasons, not just financial, that this form of change makes great sense for a smaller, weaker institution.
It is also important for almost all institutions, even those with significant endowment resources, to be thinking about possible options. The stronger the institution, the stronger the resistance to such perspectives is likely to be. There are examples of wealthy undergraduate institutions with $1 billion endowments that are losing significant sums annually in their operating budgets. Such endowments often act like a giant pillow, absorbing the institutional challenges and preventing boards and leaders from facing difficult decisions until it may be too late. Every board should be considering possible future options.
In the face of likely government rollbacks of support, the ongoing demographic challenges for smaller institutions and the general uncertainties in some circle about the importance of higher education itself, independent private higher education must be more creative and assertive about its future. Also, it is essential to remember that the existential financial challenges facing these institutions predate the current Presidential Administration and certainly will remain once it has passed into history.
Just trying to compete more effectively for enrollments will not be sufficient. Neither will simply reducing expense budgets. New collaborative models are needed. Consortia have roles to play. The example of the Coalition for the Common Good may show new directions forward. Anyone who supports the diversity of American higher education institutions should work to find new ways of assuring financial stability while adhering to academic principles and core missions.
Chet Haskell is an independent higher education consultant. Most recently, he was Vice Chancellor for Academic Affairs and University Provost at Antioch University and Vice President for Graduate Programs of the Coalition for the Common Good.
Overall, after stiff warnings this time last year about the risks of system-wide provider deficits if projected student number growth failed to materialise, OfS says that many providers are taking steps to manage their finances, by reducing costs and downgrading recruitment growth projections. It remains unlikely, says OfS, that a large provider will become insolvent in the coming financial year.
But 43 per cent of providers are forecasting a deficit for the current financial year 2024–25, and there is an overall decline in overall surplus and liquidity – albeit with the expectation of growth in the years ahead. While larger teaching-intensive and medium sized providers were more likely to report a deficit, there is also quite a lot of variation between providers in different groups – meaning that institution type is not a reliable guide to financial circumstances.
Recruitment woes
Student recruitment is the most material driver of financial pressure, specifically, a home and international student market that appears insufficient to fill the number of places institutions aspire to offer. The broad trend of institutions forecasting student number growth in hopes of offsetting rising costs – including national insurance and pension contributions – makes it unlikely that all will achieve their ambitions. There’s evidence that the sector has scaled back its expectations, with aggregate forecast growth until 2027–28 lower than previous forecasts. But OfS warns that the aggregate estimate of an increase of 26 per cent in UK entrants and 19.5 per cent in non-UK entrants between 2023–24 and 2027–28 remains too optimistic.
Questioned further on this phenomenon, OfS Director of Regulation Philippa Pickford noted that there is significant variation in forecasts between different providers, and that given the wider volatility in student recruitment it can be really quite difficult to project future numbers. The important thing, she stressed, is that providers plan for a range of possible scenarios, and have a mitigation plan in place if projections are not achieved. She added that OfS is considering whether it might give more information to providers upfront about the range of scenarios it expects to see evidence of having been considered.
Storing up trouble
While the focus of the financial sustainability is always going to be on the institutional failure scenario, arguably an equally significant concern is the accumulation of underlying structural weaknesses caused by year-on-year financial pressures. OfS identifies risks around deferral of estates maintenance, suspension of planned physical or digital infrastructure investments, and a significant increase in subcontractual (franchising) arrangements that require robust governance.
All this is manifesting in some low-key emergency finance measures such as relying on lending to support operating cashflow where there is low liquidity at points in the year, selling assets, renegotiation of terms of covenants with lenders, or seeking injections of cash from donors, benefactors or principal shareholders. Generally, and understandably, the finance lending terms available to the sector are much more limited than they have been in the past and the cost of borrowing has risen. The general increases in uncertainty are manifest in the increased work auditors are doing to be able to confirm that institutions remain a “going concern.” Such measures can address short-term financial challenges but in most cases they are not a viable long term strategy for sustainability.
OfS reiterates the message that providers are obligated to be financially sustainable while delivering a high quality student learning experience and following through on all commitments made to students – but it’s clear that frontline services are in the frame for cuts and/or that there is a limit to the ability to reduce day-to-day spending or close courses even when they are loss-making if there is likely to be an impact on institutional mission and reputation. Discussions between OfS and directors of finance point to a range of wider challenges around increased need for student support, the difficulty of recruiting and retaining staff, the increasing costs of conducting research, and shifts in the student accommodation rental market. Some even pointed to the cost of investment in AI-detection software.
The future is murky
The bigger picture points to long term (albeit unpredictable) shifts in the underlying financial model for HE. Philippa Pickford’s view is that institutions may need to shift from taking a short-term view of financial risks to a longer-term horizon, and will need to grapple with what a sustainable long term future for the institution looks like if the market looks different from what they have been used to. Deferral of capital investment, for example, may keep things going for a year or two but it can’t be put off indefinitely. There’s a hint in the report that some institutions may need to invest in greater skills, expertise and capacity to understand and navigate this complicated financial territory – and OfS is taking an increased interest in multi-year trends in financial performance, estates data and capital investment horizons in its discussions with providers.
The situation remains, however, that OfS is primarily empowered to monitor, discuss, convene and, if necessary, issue directives relating to student protection. Activity of this nature has ramped up considerably in the past year, but financial sustainability remains, at base, individual providers’ responsibility – and system-level intervention on things like changing patterns of provision, or management of the wider impact of institutional insolvency, nobody in particular’s. Government is, of course, aware of the problem but has not yet given a steer on whether its upcoming HE reform measures, expected to be published in the summer after the spending review, will grasp the nettle in delivering the support for transformation the sector hopes to see.
OfS has now said that it is talking to government to put forward the view that there should be a special administration regime for higher education. This signals that while the immediate risks of institutional closure or “disorderly market exit” are low, the pressures on a small number of institutions remain considerable. On the assumption of little or very modest changes in the funding model in the upcoming spending review, and ongoing competitive pressures, there will almost inevitably be losers.
Matthew Howling, Principal Associate at Mills & Reeve LLP, and Poppy Short, Partner at Mills & Reeve, reflect on a February round table discussion amongst university leaders chaired by Nick Hillman of HEPI.
On 26 February 2025, a group of 18 university leaders, advisors and stakeholders met to reflect on how universities can best position themselves in the current financial climate. The meeting was a follow-up to our joint dinner with HEPI on 10 October 2024 at the Royal Society in London. As we remarked at the time, there was a clear desire to continue the conversation, and the fast-paced and content-rich discussion here was a testament to that desire.
Our theme was the limits of self-help. Given the current financial headwinds, institutions have been restructuring their activities on an unprecedented scale. However, once the severance schemes, asset sales and course closures have come to pass, will these remedies be sufficient to put institutions back on a sound enough financial footing to continue to serve their students and communities for the longer term? The unspoken and yet resounding understanding across the group was that further and more radical changes are needed across the sector to stabilise the situation.
What is the role of the private providers in helping to improve the financial health of the sector? Several voices suggested that foreign investment could help to save certain British universities and that the sector needs to be less reticent about such investment. Other participants thought that, while foreign investment might work in the context of smaller providers, it was less likely to be successful when dealing with larger, more complex institutions, particularly those that have a legacy of contracts with trade unions and other stakeholders. It is well known that a number of private providers and foreign investors are waiting in the wings to acquire UK degree-awarding powers from distressed higher education providers if the opportunity presents itself. The sector should be prepared to consider its response to this.
In a recent HEPI poll, when students were presented with a list of 10 options for what could happen if their own higher education institution were to fall over financially, a takeover by a foreign company was the joint least popular option. Foreign investors would have to work hard to tackle these negative perceptions.
In some ways, the antithesis of self-help is a forced merger. It was noted that, in other jurisdictions, forced mergers are not as uncommon as might be thought. Estonia, France, Germany and Denmark had all experienced forced university mergers. Is this the direction of travel for the United Kingdom? There was a feeling that, in Wales and Scotland, there was a willingness to consider higher education provision on a more holistic basis than in England.
In terms of state support, it was felt that the sector had to acknowledge government spending pressures. The evidence of cuts to budgets elsewhere (such as foreign aid) strongly suggests that there will be no chance of further increases to the home undergraduate tuition fee in the foreseeable future and despite the need, other forms of financial help are not expected.
If government funding will not be forthcoming, the other obvious source of funds is existing lenders. Participants observed that, while sector borrowing was high, much of the recent debt taken on by providers was in the form of revolving credit facilities (which provide short-term funds up to a specified limit for a stipulated period of time, all or part of which can be repaid and re-borrowed as required), rather than the term loans that universities have traditionally found more attractive (which provide long-term funds for a specified period of time). There was concern that, in some cases, banks might be considering withdrawing those lines of credit when they come up for renewal. There was also a concern about how many institutions might be relying on revolving credit facilities to satisfy the OfS’s minimum liquidity requirements. There was anecdotal evidence that certain banks were focussing their new lending on higher tariff institutions, partly because of credit risk but also because of the ancillary opportunities to make money from larger institutions. This risks a self-fulfilling cycle of winners and losers.
It was generally felt that a new Special Administration Regime would make life easier as opposed to harder in terms of access to funds. It is not necessarily about encouraging enforcement by banks. It is highly unlikely that a UK clearing bank would want the adverse publicity associated with enforcing against a UK university (although foreign lenders may be less PR squeamish). However, giving lenders a clear line of sight as to a recovery process, even if not used in practice, may further encourage commercial lending to the sector.
Beyond the question of more money, there was a feeling that certain sector skills were lacking to navigate these troubled waters. As one participant put it, transformation expertise was what was needed, not just transformation funds. And how does all this transformation happen at pace?
Above all, there was a sense that the sector needed to move as one on certain key issues. One example was the increased costs for post-92 institutions associated with the Teachers’ Pension Scheme. Another key area where the sector needs to work together is soliciting the opinion of the Competition and Markets Authority (CMA) on how universities can collaborate without breaching competition law. There were grounds for optimism: the CMA guidance on applying the competition rules to sustainability agreements and collaborations is an example of the CMA taking a proactive approach to assuage concerns that competition law should not hinder legitimate collaboration where this was in the public good. In other areas, such as procurement and shared services, it was felt that there was much that the sector could be doing together to be more efficient and reduce the cost of delivery.
As an hour of rapid and informed discussion drew to a close, perhaps the overall conclusion was that it is only by acting collectively that the sector can arrive at solutions to allow institutions to truly put their houses in order at an individual level. Universities need to start planning how they will support themselves through this next phase. To survive they will need to mobilise themselves to work at pace to foster local and regional connections to drive forward the priorities for their regions.
The Carnegie Foundation for the Advancement of Teaching and the American Council on Education announced Thursday that they have launched a pilot of their new Sustainability Elective Classification, a designation that will recognize institutions of higher education that “embed sustainability and climate action into their core missions,” according to the announcement.
The pilot program will include 21 colleges and universities from across the 50 states and Puerto Rico and will aim to refine the criteria for the classification while working to guarantee that it is attainable to institutions of all sizes and types. The classification is expected to consider “institutional efforts across curriculum, research, operations, community engagement, and workforce development, with an emphasis on preparing students for careers in sustainability fields.”
“The Elective Classification for Sustainability recognizes how institutions of higher education are essential to the future of American innovation and progress, within and beyond their classrooms,” Timothy F. C. Knowles, president of the Carnegie Foundation, said in the announcement. “These pilot institutions are helping to forge the way.”
The Sustainability Elective Classification is scheduled to launch in early 2026. The Carnegie Foundation and ACE are also looking for a university or institution to serve as the classification’s administrative and operational host.
Promoting sustainability literacy in higher education is crucial for deepening students’ pro-environmental behaviour and mindset (Buckler & Creech, 2014; UNESCO, 1997), while also fostering social transformation by embedding sustainability at the core of the student experience. In 2022, our group received an SRHE Scoping Award to synthesise the literature on the development, teaching, and assessment of sustainability literacy in non-STEM higher education programmes. We conducted a multilingual systematic review of post-2010 publications from the European Higher Education Area (EHEA), with the results summarised in Kalocsányiová et al (2024).
Out of 6,161 articles that we identified as potentially relevant, 92 studies met the inclusion criteria and are reviewed in the report. These studies involved a total of 11,790 participants and assessed 9,992 university programmes and courses. Our results suggest a significant growth in research interest in sustainability in non-STEM fields since 2017, with 75 studies published compared to just 17 in the preceding seven years. Our analysis also showed that Spain, the United Kingdom, Germany, Turkey, and Austria had the highest concentration of publications, with 25 EHEA countries represented in total. The 92 reviewed studies were characterised by high methodological diversity: nearly half employed quantitative methods (47%), followed by qualitative studies (40%) and mixed methods research (13%). Curriculum assessments using quantitative content analysis of degree and course descriptors were among the most common study types, followed by surveys and intervention or pilot studies. Curriculum assessments provided a systematic way to evaluate the presence or absence of sustainability concepts within curricula at both single HE institutions and in comparative frameworks. However, they often captured only surface-level indications of sustainability integration into undergraduate and postgraduate programmes, without providing evidence on actual implementation and/or the effectiveness of different initiatives. Qualitative methods, including descriptive case studies and interviews that focused on barriers, challenges, implementation strategies, and the acceptability of new sustainability literacy initiatives, made up 40% of the current research. Mixed methods studies accounted for 13% of the reviewed articles, often applying multiple assessment tools simultaneously, including quantitative sustainability competency assessment instruments combined with open-ended interviews or learning journals.
In terms of disciplines, Economics, Business, and Administrative Studies held the largest share of reviewed studies (26%), followed by Education (23%). Multiple disciplines accounted for 22% of the reviewed publications, reflecting the interconnected nature of sustainability. Finance and Accounting contributed only 6%, indicating a need for further research. Similarly, Language and Linguistics, Mass Communication and Documentation, and Social Sciences collectively represented only 12% of the reviewed studies. Creative Arts and Design with just 2% was also a niche area. Although caution should be exercised when drawing conclusions from these results, they highlight the need for more research within the underrepresented disciplines. This in turn can help promote awareness among non-STEM students, stimulate ethical discussions on the cultural dimensions of sustainability, and encourage creative solutions through interdisciplinary dialogue.
Regarding factors and themes explored, the studies focused primarily on the acquisition of sustainability knowledge and competencies (27%), curriculum assessment (23%), challenges and barriers to sustainability integration (10%), implementation and evaluation research (10%), changes in students’ mindset (9%), key competences in sustainability literacy (5%), and active student participation in Education for Sustainable Development (5%). In terms of studies discussing acquisition processes, key focus areas included the teaching of Sustainable Development Goals, awareness of macro-sustainability trends, and knowledge of local sustainability issues. Studies on sustainability competencies focussed on systems thinking, critical thinking, problem-solving skills, ethical awareness, interdisciplinary knowledge, global awareness and citizenship, communication skills, and action-oriented mindset. These competencies and knowledge, which are generally considered crucial for addressing the multifaceted challenges of sustainability (Wiek et al., 2011), were often introduced to non-STEM students through stand-alone lectures, workshops, or pilot studies involving new cross-disciplinary curricula.
Our review also highlighted a broad range of pedagogical approaches adopted for sustainability teaching and learning within non-STEM disciplines. These covered case and project-based learning, experiential learning methods, problem-based learning, collaborative learning, reflection groups, pedagogical dialogue, flipped classroom approaches, game-based learning, and service learning. While there is strong research interest in the documentation and implementation of these pedagogical approaches, few studies have so far attempted to assess learning outcomes, particularly regarding discipline-specific sustainability expertise and real-world problem-solving skills.
Many of the reviewed studies relied on single-method approaches, meaning valuable insights into sustainability-focused teaching and learning may have been missed. For instance, studies often failed to capture the complexities surrounding sustainability integration into non-STEM programs, either by presenting positivist results that require further contextualisation or by offering rich context limited to a single course or study group, which cannot be generalised. The assessment tools currently used also seemed to lack consistency, making it difficult to compare outcomes across programmes and institutions to promote best practices. More robust evaluation designs, such as longitudinal studies, controlled intervention studies, and mixed methods approaches (Gopalan et al, 2020; Ponce & Pagán-Maldonado, 2015), are needed to explore and demonstrate the pedagogical effectiveness of various sustainability literacy initiatives in non-STEM disciplines and their impact on student outcomes and societal change.
In summary, our review suggests good progress in integrating sustainability knowledge and competencies into some core non-STEM disciplines, while also highlighting gaps. Based on the results we have formulated some questions that may help steer future research:
Are there systemic barriers hindering the integration of sustainability themes, challenges and competencies into specific non-STEM fields?
Are certain disciplines receiving disproportionate research attention at the expense of others?
How do different pedagogical approaches compare in terms of effectiveness for fostering sustainability literacy in and across HE fields?
What new educational practices are emerging, and how can we fairly assess them and evidence their benefits for students and the environment?
We also would like to encourage other researchers to engage with knowledge produced in a variety of languages and educational contexts. The multilingual search and screening strategy implemented in our review enabled us to identify and retrieve evidence from 25 EHEA countries and 24 non-English publications. If reviews of education research remain monolingual (English-only), important findings and insights will go unnoticed hindering knowledge exchange, creativity, and innovation in HE.
Dr. Erika Kalocsányiová is a Senior Research Fellow with the Institute for Lifecourse Development at the University of Greenwich, with research centering on public health and sustainability communication, migration and multilingualism, refugee integration, and the implications of these areas for higher education policies.
Rania Hassan is a PhD student and a research assistant at the University of Greenwich. Her research centres on exploring enterprise development activities within emerging economies. As a multidisciplinary and interdisciplinary researcher, Rania is passionate about advancing academia and promoting knowledge exchange in higher education.
