Will England’s universities go bust if fees are cut?
said universities face a ‘perfect storm’ — with a demographic dip in the number of 18-year-olds and Brexit casting a shadow over recruiting international students.
There are universities already on financial thin ice — in debt over new buildings and then struggling when they fail to attract students.
And if a university has a terrible year for recruitment, they have three years of teaching that reduced cohort and its smaller income.
Dr. Greg Walker, the chief executive of the Millionplus group of new universities, warned if funding for students is cut, or there are limits on numbers, there are risks of ‘significant damage’.
“Difficult choices could well have to be made,” he said.
But he said undermining university finances would be a ‘national own-goal’.
Even without changes to fees, is the university sector going to eat itself?
Sir Anthony Seldon, the vice chancellor of the University of Buckingham, and an influential figure in the politics of education, said there is already a “serious risk that some universities will go under”.
He warned that the aggressive expansion of some ‘juggernaut universities’ is pushing others out of business.
There are a finite number of students — and if some universities take an ever-rising number, others will be left starved of fee income.
Seldon attacked a ‘greedy cohort’ for threatening the higher education ‘ecosystem’.
Figures from the Higher Education Statistics Agency show some universities have piled on extra students, while others have shrunk.
Over the past decade, Exeter University has expanded its undergraduate numbers by 72 percent.
University College London has grown by 65 percent, York 48 percent, Bath 46 percent and Bristol by 41 percent.
But London Metropolitan University has shrunk by 62 percent, with the University of West London down by 44 percent, Cumbria by 41 percent, the University of Central Lancashire by 34 percent and University of East London by 33 percent.
If this process continues, Seldon said, it will threaten the future of some universities.
But the University of Exeter rejected the criticism, saying it is ‘proud of its growth’ and expanding has allowed more people to get places, rather than being turned away “because of our lack of space”.
Ministers and regulators have always kept to the script that they will not intervene.
Last week, Universities Minister Chris Skidmore, said, “There is an expectation that in a small number of cases providers may exit the market altogether as a result of strong competition.”
But Hillman said the risks of a financial crisis will not be shared evenly, and it is likely to be survival of the biggest.
Only smaller institutions would be allowed to fail.
Big universities are major employers, anchors of the local economy, and the legal and political fallout from closure would be too toxic, he said.
Above a certain size, he said, “the government cannot let a university fall over”.
A report last week from the civic university commission of the University Partnerships Program (UPP) Foundation — a registered charity that offers grants to universities, charities and other higher education bodies — showed universities’ pivotal place in regional economies.
In Sheffield in 1978, it said “there were 4,000 students and nearly 45,000 people working in the steel industry”.
“Today, there are 60,000 students and 3,000 steelworkers.”
Mergers or takeovers are more likely than shutdowns, so that students could carry on, even though the name of the institution might have changed.
Universities, as part of their registration with the Office for Students, have to produce a ‘student protection plan’ showing how students could continue with their studies even if their university or course closed.
Even if universities buckle financially, they would still have a long stretch before hitting the rocks.
“The capacity to cope with decline can vary,” said higher education adviser, Louis Coiffait.
Some universities could trade for a long time on the value of their assets, such as land or property, with selloffs giving them enough of a ‘war chest’ to fund a recruitment drive and recovery, he said.
Walker said if the review could reverse the decline in part-time students that would mean a significant improvement particularly for new universities.
“The right recommendations could rocket-boost support for prospective students wishing to study flexibly,” he said.
A switch from fees to direct funding, without an overall loss of budget, could give universities a more stable income, less vulnerable to unpredictable levels of recruitment.
But if fees are lowered, perhaps for autumn 2020 or later, there are are fears about a sudden drop in university cash flow, as students would be likely to postpone starting.
As such the review is being urged to include a phased approach to any changes.
* Sean Coughlan is BBC News education and family correspondent.