UK MPs Call for Stronger Student Protections as 24 Universities Face Insolvency Risk

Students require stronger government safeguards if an English university collapses financially and fails to meet its debts, a group of MPs said in a new report.

The Education Select Committee stated that 24 institutions now face insolvency risks within the next 12 months. Many have already cut jobs, closed courses and sold buildings or land.

Helen Hayes, the Labour MP for Dulwich and West Norwood who chairs the committee, said protecting students who have invested time, money and energy in their studies must come first.

A Department for Education spokesperson said the government remains committed to a secure future for universities so they can serve students, taxpayers and the economy.

Hayes added, "Developing an early warning system is essential. The government and the Office for Students should be ready to step in when the lights are turning amber, not when they are already flashing red."

She described the prospect of a major UK university going insolvent as "a real possibility, not a theoretical warning."

The report recommended creating a protocol with detailed plans to shield students and staff. Options include merging with another institution, restructuring or an orderly exit, where the university closes but makes arrangements for students, staff and courses.

The Office for Students, the higher education regulator, fears 24 providers are at risk of insolvency and market exit in the next year, including seven with more than 3,000 students each.

Another 26 institutions face exit risks within two to three years, though some are smaller since only about half have more than 3,000 students.

The Department for Education said it has acted to stabilize the sector financially by raising the maximum tuition fee cap and directing the Office for Students to prioritize universities' financial health.

"Through our ambitious reforms announced in the post-16 education and skills white paper we will restore universities as engines of growth, aspiration and opportunity," the department said.

Still, the report noted that a freeze on undergraduate fees has hurt university budgets, pushing them to raise more revenue from postgraduate and international student fees.

International students make up a quarter of enrollment but provide over 45 percent of fee income.

Hayes said that if the government aims to cut international student numbers, it must explain how to steady university finances.

The University and College Union responded that the report shows the government is "asleep at the wheel" as universities approach a "financial cliff edge."