Has the ‘super university’ paved the way for increased regulation of universities in England?
News that lenders are renegotiating the terms of loans to universities, and in some cases taking security to gain greater comfort over loans, marks a significant shift in the relationship between universities and their investors and highlights the extent of the financial pressures and uncertainty facing the sector.[1] With 44% of universities in England forecasting a deficit this year[2] and the government’s delayed Post-16 Education and Skills Strategy likely to land close to the Budget in November, we consider the impact of visa restrictions and stagnation of domestic tuition fees, and whether the ‘super university’ has paved the way for further regulation in the sector.
Background
The financial pressures facing the sector are not new, crystalising post-pandemic when students became more vocal in querying the value for money they were receiving in return for significant investment when the cost-of-living continues to increase. The “looming crisis facing higher education” was reported under the previous government by the House of Lords Industry and Regulators Committee in September 2023.[3] The report, considering the work of the Office for Students (“OfS”)[4], warned of “a worrying complacency” that uncapped tuition fees from international students could be relied upon long-term despite this income stream being vulnerable to geopolitical shifts, increased international competition and domestic policy. The report’s recommendations included that the government and the regulator should clarify whether there is any “strategic oversight” of the sector’s long term financial stability, “including whether to encourage mergers and consolidation”. The Competition and Markets Authority (“CMA”) acknowledged the financial challenges facing universities in a blog post on 20 May 2025 and that “greater collaboration between universities could help support the sector”.[5] The announcement this month that the universities of Kent and Greenwich intend to form a new “super-university”[6] from next year may lead other organisations to explore similar models to sure up finances and improve the student offer.
Drop in international students
The government published its Immigration White Paper “Restoring Control over the Immigration System”[7] in May 2025 and the impact of proposed changes to student visas has already been felt across the sector with a reported 18% drop in visa applications from international students last month compared with August 2023.[8] The changes proposed include shortening the length of visa grant under the graduate route (international students who have completed an eligible degree) from two years to 18 months and introducing a 6% levy on tuition fees for international students, likely to have to be passed on to students by universities given their financial constraints. The proposed levy coincides with a drop in reputation for English universities (outside of Oxford retaining the top spot), with this year’s world university rankings recording a drop in average teaching and research reputation scores for the second year in a row.[9] Meanwhile, new countries are represented in the top 200 this year including the United Arab Emirates (Abu Dhabi University) and Brazil (University of São Paulo) with China and Japan increasing their representation in the top 200 with 13 and 5 universities in the top 200 respectively.
Improving standards in students’ home countries coupled with tighter visa restrictions may make the inflated fees and living costs as an international student in England harder to justify. The government has said that levy funds will be “reinvested into the higher education and skills system” while acknowledging the significance of international student tuition fees (over 12 billion in 2022/23) to funding research which is essential to maintaining the sector’s world-leading reputation in an increasingly competitive market.[10] The detail on how the government plans to reinvest levy funds is expected in the Autumn Budget alongside wider higher education reform.
Sector reform
The Autumn Budget will mark a year since the Secretary of State for Education, Bridget Philipson, wrote to Vice Chancellors on 4 November 2024 heralding “the start of a process of wide-scale reform in the higher education sector.”[11] The letter was timed in close proximity to the Budget the previous week which set out the challenges and tough decisions the government faced due to its inheritance, setting five priorities for higher education reform in that context:
- Play a stronger role in expanding access and improving outcomes for disadvantaged students.
- Make a stronger contribution to economic growth.
- Play a greater civic role in their communities.
- Raise the bar further on teaching standards, to maintain and improve our world-leading reputation and drive out poor practice.
- A sustained efficiency and reform programme.
Ms Philipson expected that meeting these priorities would require “a more fundamental re-examination of business models and much less wasteful spending”, putting the ball squarely in the court of the sector to find solutions to the financial difficulties it faces, notwithstanding that the domestic tuition fee increase to £9,535 for the current academic year is a real terms reduction of over a quarter since domestic fees were increased to £9,000 in 2012.[12]
Following last year’s independent review, the OfS is re-focusing on monitoring the financial stability of universities more closely, the government endorsing the review’s findings and stressing the role of the regulator to “help stabilise university finances”.[13] The review recommended that government and the OfS consider the “legislative powers and tools required” to enable the OfS to regulate effectively, including developing an infrastructure to mitigate against disorderly market exit, questioning whether the regulator’s “non-interventionist positioning is still the most appropriate for meeting the challenges of today.”[14] The challenge is a steep one and strong regulatory leadership could be key to maintaining the sector’s value in shifting market conditions and unlock more opportunities for universities to collaborate and improve their financial standing.
An uncertain future?
Replicating a ‘super university’ model with a unified governing body, academic board and executive team may help sure up finances in the short-term, but clarity on the government’s long-term funding plans and bold regulation is needed alongside innovative governance and financial management to stabilise and preserve the sector’s status in a changing market.
We will be reviewing the government’s Post-16 Education and Skills Strategy when it lands, and our team is on hand to assist with your regulatory queries.
[1] Banks tighten debt terms as squeezed UK universities refinance loans
[2] Financial sustainability of higher education providers in England 2025
[3] Must do better: the Office for Students and the looming crisis facing higher education
[4] The regulator for higher education in England.
[5] Supporting higher education providers through beneficial collaborations – Competition and Markets Authority
[6] Kent and Greenwich announce ‘trailblazing’ collaboration - News Centre - University of Kent
[7] Restoring control over the immigration system white paper
[8] UK study visa applications drop as immigration changes hit universities
[9] World University Rankings 2025 key trends
[10] Restoring control over the immigration system (accessible) - GOV.UK
[12] Inflation calculator (beta) | Bank of England
[13] Government watchdog to help stabilise university finances - GOV.UK
