Around one in six institutions on the Office for Students¡¯ register were subjected to ¡°formal monitoring¡± by the regulator over their finances last year, while five had a ¡°student protection direction¡± imposed?because of a ¡°material risk of closure¡±.

Further details about the state of the ailing finances of the sector were revealed in the OfS¡¯ annual report, published on 18 July.

Covering the 2024-25 financial year, it details the regulator¡¯s efforts to monitor financial sustainability at a time when many institutions were struggling?owing to frozen fees, declining enrolments and rising costs.

Of the more than 400 providers registered with the OfS, 71 were identified as in need of formal monitoring, which includes ¡°engagement meetings¡± and potentially ¡°regular scrutiny of bespoke data returns¡±.

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A further 130 experienced less formal engagement and monitoring efforts, according to the . These aimed ¡°to improve our understanding of how a provider is managing the risks it is facing¡±.

As of 31 December 2024, there were five active ¡°student protection directions¡± in place. These ¡°set out steps a provider must take to protect students, such as setting out arrangements to secure continuity of study for current and future students if it is unable to continue to operate¡± and that are imposed when that provider is at ¡°material risk of closure¡±.

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Last December, the regulator was forced to pause much of its other work to focus on the finances of institutions. This allowed it to reallocate 33 full-time equivalent staff to work on ¡°financial sustainability and potential market exit cases¡±, the report details.

The government also gave the regulator an additional ?1.5 million over the financial year ¡°to provide additional capacity and a greater range of expertise to evaluate the financial risks and transformation plans of individual providers¡±.

Work on financial sustainability is expected to continue to rise in the current year, according to the report.

The latest OfS analysis of sector finances found nearly half of English universities are facing a financial deficit this year after their performance lagged behind forecasts.

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Board papers released by the regulator earlier this week showed it has commissioned five accountancy firms to perform ¡°deep dive financial monitoring reviews at individual providers¡±.

The Department for Education has also made the?possibility of a higher education institution ¡°exiting the market¡± one of the ¡°top tier risks¡± facing the education sector.

An annual report published on 17 July said the risk rating had been ¡°escalated¡± to ¡°critical ¨C very likely¡± in 2024-25.

In its own annual report, the Department of Science, Innovation and Technology also identified higher education financial sustainability as a ¡°risk¡±?that could see the closure of ¡°significant research departments¡±.

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¡°This would have significant implications for the UK¡¯s R&D skills base, research quality, research outputs/assets and the UK¡¯s reputation,¡± the report says.

tom.williams@timeshighereducation.com