Thursday, 13 February 2020 00:27

Which University Will Be First To Go Bankrupt?

Universities are under financial pressure. Falling applicants numbers, watered-down degrees, missold courses, and we have the perfect storm.

Most students believe that when they start a three-year course at University, the University will still be there when they finish the course. Those days may now be over. For the first time, we are recommending to students that they research the financial strength of the University before they apply, sort of like a credit check. That is because some Universities are about to close their doors for good.

Our investigation has revealed that 18 Universities have applied for emergency short term loans to get them through until the end of the academic year 2019/20.

The problem for Universities is that there is little positive news on the horizon that will change their financial status. Too many universities are trying to attract fewer and fewer new students. Students numbers have been falling for over a decade. Some Universities have been making courses easier; this has led to employers devaluing degrees and even fewer students going to University. Add to that, the mountain of debt students leave University with, and it is no surprise that students are opting for alternatives like apprenticeships.

How do Universities get financial institutions to lend them money if they are their business model is failing? They offer creditors security in the form of properties on their campuses. By doing this, they really are taking a big gamble. Fail to make repayments on time and the banks take the buildings. To us, it seems an almost certainty that the losses will continue and eventually Universities will not be able to repay their debts.

There are only two possibilities that might save them in the future. They reduce their fees to attract more students to their University. Or they hope that other Universities go out of business before them. If that happens, there will be less competition for courses. It is, in a way, the survival of the fittest. There is maybe a third way, bosses at these Universities could take a pay cut on their £300,000 a year salaries. We all know that isn't going to happen.

And as though this wasn't a big enough problem, on the horizon are claims companies taking on claims for students who claim that their courses were missold. A Degree misselling scandal could finish off 70% of Universities in the UK.

They only have themselves to blame.

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