Are financial sustainability and student protection compatible?

One is its focus on “how to handle the massive fire” rather than fire prevention. Smoke all you like indoors, and pile up highly flammable stuff all around the building if you like, but here’s some recommendations on buying enough fire extinguishers.

Another is its focus on what I’ve previously described as explosion rather than implosion.

Explosion is the dramatic scenario – a provider fails, it’s all over the press, students can’t complete, there’s a scramble to deliver teach-out arrangements, and possibly transfers to other providers.

It’s the scenario that (at least ought to) lend itself to ministerial concern, dramatic select committee evidence sessions, and policy hooks like “special administration regimes,” “early warning protocols,” and “teach-out plans.” The Committee’s report is fulsome on all three, and so are the recommendations.

Meanwhile, implosion is what happens when a provider survives – but the course a student signed up for doesn’t. And I don’t just mean “it closes – I mean specialist staff take voluntary redundancy. Optional modules are culled. Library opening hours shrink. The disability assessment queue lengthens. The lab you saw on the open day becomes “limited access.” Industrial action and pay restraint hollow out goodwill. The promised seminar of fifteen becomes a lecture of fifty.

Trigger’s broom. The course is technically still running, but the experience you were promised is dying via 1,000 cuts.

Two kinds of bad

I think many assume that explosion is the worse outcome of the two, and for some students it clearly is. If your provider closes mid-degree without arrangements in place, you face real catastrophe – stress, relocation costs, qualifications in limbo, and so on.

But the regulatory framework, such as it is, at least notices when this happens. Student protection directions, market exit plans, OIA complaint routes, OfS’ “current closures” webpage, and so on. Teach-out is talked about, a lot. Transfer is talked about too.

But if your provider survives but your course gets hollowed out, you’re largely on your own. Course closure isn’t even a reportable event under OfS’ framework, so OfS may not know it’s happened. “Material components” of your course can be removed without triggering anything – partly because OfS has never properly defined the term (even in its new C6 proposals) and partly because most student protection plans get away with defining it as core modules only.

That in turn allows any number of advertised specialist pathways to be swept away in a redundancy round with no protection for the students who chose the course on the basis of those pathways. And there’s even less overt protection over all of the other services or facilities you might have chosen that campus or provider over.

Even if you tell students they can complain, they won’t. In the words of one undergraduate in an OPfS-commissioned Public First focus group:

If you were unhappy with your course, I don’t know how you’d actually say to them, ‘I want my money back, this was rubbish,’ basically. I don’t think that they would actually do that. It would just be a long, drawn-out process and they could just probably just argue for their own sake that your experience was your experience, other students didn’t agree, for example, on your course.

It’s already happening

Thing is though, implosion isn’t some vague potential future risk. It’s the survival strategy.

OfS’ own commissioned Savanta polling, fieldworked in April 2025 and finally published in January 2026, found that 52 per cent of students had noticed measures at their institution that they perceived as cost-cutting. Of those who had noticed, 83 per cent reported that these measures had changed the higher education experience that they felt their institution had promised them.

44 per cent observed changes to staff availability and capacity. 40 per cent reported increased class sizes (44 per cent of postgraduates). 29 per cent noticed course changes and closures. 26 per cent reduced library hours. 26 per cent changes to teaching quality. 24 per cent limited access to specialist subject facilities. 24 per cent changes to student choice and module availability. 24 per cent changes to placements. 21 per cent changes to academic and pastoral support. 19 per cent changes to mental health services.

I was promised a class of 15 but now there are 25 students per class.” “Many of my lectures were moved online… due to budget cuts.

The support I get as a student has reduced compared to what I was told I would get when I enrolled.

Modern facilities like labs and student spaces have seen budget cuts.

They promised to provide us with all the learning equipment in school, but now I have to bring my own laptops.

An earlier OfS-commissioned piece of work in February 2025 had already found that 28 per cent of undergraduates felt contact hours had been insufficient, 32 per cent had issues with how their course was taught, and 23 per cent reported lower quality teaching than expected.

The Public First research published in June 2025 found that:

…more than three-quarters of respondents to our polling said that some commitments were not met in full.

Cut, cut, cut

For most of the past three years, the Office for Students (OfS) has been on a fairly relentless drumbeat about financial sustainability, with the volume turning up each year.

Its May 2024 report flagged “an increasing need for further and bolder efforts to make cost savings to maintain financial sustainability.” The November 2024 update warned that some providers were not acting fast enough. The May 2025 report modelled scenarios in which up to 200 providers could be in deficit by 2027-28. The November 2025 update warned against “persistent over-optimism” and described some providers’ transformation as not going “far enough.”

And this week’s report, published five days ago, sharpens it all a bit more still.

We have seen an increasing number of providers take action to address their financial position, with much of that focused on income diversification and cost reductions… However, most financial risk management remains predominantly short-term in nature.

Our view is that forecasts that repeatedly assume strong future growth are potentially masking the need for more fundamental structural changes for some providers, and the need in some cases for new business models, including mergers and other forms of consolidation.

The message is – too many providers have too many eggs in the basket labelled “we’ll grow our way out of this” via franchising, TNE, international or just massively destabilising the home student market. Too few are looking at the other column on the excel sheet. Cut more costs, and do it faster and deeper.

Some are doing so – and this week’s Financial Sustainability report gives those actions a 2:1, but not quite a first.

The publicised annual reports of many of these providers suggesting that this is being delivered primarily through voluntary redundancy schemes.

The student to academic staff ratio is forecast to rise by around 3 per cent each year for 2025-26 and 2026-27, and that’s an average. Capital expenditure is down 7.9 per cent. Backlog maintenance sits at £8.9 billion, with only 48.3 per cent of it accounted for in forecasts.

OfS’ own assessment is that it’s still not enough.

The measures taken to date to address financial pressure have not yet been sufficient… these providers may need to take further and more sustained action.

Meanwhile, down the corridor

Meanwhile lots of the the financial sustainability report flags as positive show up, in another part of OfS, as negative.

Take the 3 per cent annual change in student-staff ratios. In the financial sustainability report, that’s an aggregate signal of cost discipline. In its polling on student perceptions, it’s the 44 per cent of students who noticed cuts and observed changes to staff availability, the 40 per cent who reported larger class sizes, and the postgraduate who is quoted as saying:

…the previous master’s class had five students, and this one has over 50.

Or take the the £218 million of voluntary redundancy spend. In the financial sustainability report, that’s “increased cost-saving activity across the sector.” In reality, that’s the stories I hear of approving everyone that applies for VR so the savings target agreed with governors can be met, leaving “will we have enough people left in each bit of the university” to a later conversation.

Or take the capital underspend and the deferred maintenance. In the financial sustainability report, that’s providers “prioritising cash flow and liquidity in response to ongoing uncertainty,” with the regulator noting only in passing that this “could lead to a deteriorating estate, higher maintenance costs and potential impacts on the student experience.” In the polling, that’s the postgraduate quoted as saying modern facilities like labs and student spaces have seen budget cuts.

Even the structural change rhetoric is an issue – “mergers and other forms of consolidation,” “new business models,” “different approaches to business models, financial planning and operational decision-making.” In the financial sustainability report, that’s where governing bodies need to get on with.

In the regulator’s’ parallel proposed condition C6 (“Treating students fairly”) “relevant changes” requiring published student protection arrangements explicitly include changes to “courses (including changes to material components or content of a course, changes to subjects offered and course closure)… qualifications to be awarded… mode of study (including full-time, part-time, online and hybrid provision)… teaching location and facilities (including closure of a campus, building or other facilities)… course fees and other related fees or charges… types of student to be recruited or taught.

The premise of C6 is that “consumer protection concerns continue to arise across the sector and current regulatory requirements have not been sufficient.” Providers will be required to “treat students fairly” – to “say what they mean: they provide clear, accurate and honest information to support informed decisions” and to “mean what they say: they deliver the experience promised and act as expected to resolve issues when they arise.”

Another OfS see-saw

It’s another OfS see-saw. We’ve been here before with EDI and free speech – two important objectives, both real, both with statutory force, both with their own guidance produced by different bits of the regulator at different times in increasingly assertive tones, and no attempt at meaningful reconciliation between them.

Just as with EDI and free speech, the right thing to do is to integrate the two coherently in advance – rather than dump separate sandbags on one side of the see-saw on different days and pretend the inconsistency is somebody else’s problem.

Providers might argue that it’s impossible to square the circle – that you cannot simultaneously cut costs at the scale and pace both financial reality and OfS is demanding and keep all the commitments you made in your admissions material. OfS, if asked directly, would presumably say you have to. But the lopsided weight of regulatory attention to date tells us which end the see-saw has been leaning on.

It is, just about, possible. But only if you’re honest about the incentives.

Just as with the over-optimistic financial forecasts – where the OfS framework rewards providers for not telling the truth about their risks, because reporting risk triggers regulatory attention – the structural incentives in a marketised admissions system are to over-promise during recruitment and under-deliver during teaching, because the numbers have to keep rolling in.

Promising 24 hour library access, gleaming labs, named specialist staff, fourteen optional modules and personal tutoring is good for conversions in March. The consequences of not delivering it land months or years later, by which point the student is enrolled, in debt, geographically committed, and largely unable to leave.

If you want to fix that incentive, there are essentially two paths. One is to slowly demarketise – progressively reduce the prospectus-as-marketing-document arms race, standardise core disclosures, limit aspirational language, require pre-contractual key facts statements in something approaching the way financial services has to, some controls on student numbers (both home and international).

The other would be to make breaking promises to students just as risky to a provider’s regulatory standing as falling over financially is. If liquidity buffer running low attracts intensive engagement, “you didn’t deliver what you advertised” should too.

C6 is a step in that second direction, but a baby one. The consultation closes in July 2026, decisions in autumn 2026, and phased implementation after that. We’re realistically looking at 2028 at the earliest before any of it bites – with monetary penalties and “the use of the full range of enforcement powers” the eventual sanctions, alongside the OIA and its statutory complaints scheme.

That’s not parity with financial sustainability enforcement, where reportable events trigger live engagement within weeks. C6 makes consumer protection essentially an ex-post discipline – student complains, slow process kicks in, eventually maybe something happens. Financial sustainability is a continuous monitoring discipline. It makes C6 look like compliance theatre.

The library question

That OfS is being Kafka-esque again is what it is. More surprising is its’ apparent lack of curiosity over how costs are actually being cut.

The financial sustainability report says that 65 providers are reporting restructuring costs, “primarily through voluntary redundancy schemes”, and that’s pretty much it. There’s no breakdown of redundancies by function, no analysis of whether the leavers were in teaching, support, technical or estates roles, and no commentary on the implication of a 3 per cent annual deterioration in student-staff ratios for things like class sizes, marking turnaround, feedback timeliness or office hours.

It’s the £218 million question – of what £218 million of departing staff actually means for the students they were teaching, supervising, supporting and pastorally caring for.

Either corporately OfS thinks the scale of cuts so far is a) not having a negative impact on the student experience that students perceive themselves as having been promised, b) that in every case the bulk of provider’s promises are being met, or c) it’s turning a blind eye.

We know it’s not a). Its justification for C6 is b). But is it even possible?

Suppose you’re a provider that’s promised 24 hour library access on an open day in early 2024. New students enrolled in September 2024 on that basis – some explicitly were impressed by it. Now, in May 2026, you face several million pounds of cuts and the library 24/7 operation is a tempting line item. You need to take it down to 12 hours.

What are you supposed to do, exactly? Keep 24 hour access for the 2024 cohort until they’ve completed their courses, but restrict new 2026 entrants to 12 hours?

There’s no good answer. Which is precisely why a regulator that’s genuinely interested in the student interest – not just in saying it is – would be very interested in how some providers seem to manage cost reductions without triggering the consumer-protection problems others trigger.

What are they cutting that doesn’t show up in the Savanta data? Where are the case studies? Why is OfS not commissioning the research that would tell governing bodies what good looks like, alongside the research that has now several times told them what bad looks like?

Higher education is just not a thing that is suited to rapid expansion or rapid contraction of student numbers. Universities are, by definition, slow – REF cycles measured in five-year units, modules built up over a decade. You can’t snap-cut a course and snap-rebuild it once the budget eases. The optional pathway in marine biology that closes in 2026-27 isn’t coming back in 2030-31 just because international recruitment recovers. The specialist staff who took voluntary redundancy aren’t being rehired – they’re at consulting firms now, or retired, or in industry.

A see-saw that pretends rapid contraction is possible without consequences for the students currently enrolled is not a helpful regulatory model. Proper curiosity about which cuts are sustainable and which trigger consumer-protection problems – fed back to government as evidence for why “we’ve put fees up by an already outdated measure of inflation” is the opposite of a plan for HE – would be considerably more useful.

Reconcile thyself

There’s an odd little section in the C6 proposals. Most of the meaning in the doc is a way of saying “here’s our remix on consumer law without saying consumer much”, despite the fact that expectations of “fairness” in the brain of a student goes well beyond the things the measures cover. A student reading OfS’ guide to fairness and not finding anything on assessment, for example, is going to be baffled.

But the bigger issue runs like this. The proposed condition says universities must treat “each student” fairly. The explanatory text a few pages later, at paragraph 38, also reframes the same duty as fairness to “students overall.”

They are different tests. “Each student” is the consumer-law framing – you ask whether the individual in front of the institution got what they were promised, in the same way you’d ask whether the customer got the takeaway they ordered. “Students overall” is a multi cohort-level framing – where a greater good trade off can be used to justify a raw deal.

When a public service is funded by the state, the truth is that citizens have to often poke up with the latter – there’s always another election on the way. But once you promise things to people on the basis of the fees they pay, you can’t avoid the former. Individualise the funding and you individualise the commitment.

If that results in providers not feeling able to balance their wider duties, either show them how or explain to government that it can’t be done. My fear – cock up not conspiracy stuff – is that the regulator hasn’t even spotted the problem.

Who knows how this all works. But OfS is a public body with around 400 staff, and at a place that size it’s easy to imagine that one department’s problem is another department’s solution. The financial sustainability function needs providers to cut faster – job done, restructuring costs are up 20.7 per cent, voluntary redundancies are flowing. The student protection function needs providers to cut without breaking promises – job done, C6 is out for consultation. The integration between the two is somebody else’s problem. The board’s? The CEO?

But just as with free speech and EDI, if the regulator expects providers employing two, three, ten thousand staff to reconcile both financial sustainability with student protection in coherent operational decisions in the current financial context, the least it can do is do that reconciling itself first.

Until then, “regulating in the student interest” will continue to mean what it has meant to students for most of the last decade. Nothing.