London, Nov 15 : The higher education sector in England faces continued financial pressures due to reductions in the number of students entering higher education, according to a report by the Office for Students (OfS), the regulator for British higher education.

The report suggests that, without taking steps to address financial risks, 72 per cent of higher education providers could be in deficit by 2025-26, and 40 per cent would have fewer than 30 days' liquidity. It estimates a net income reduction of 3.45 billion British pounds (4.38 billion US dollars) for the sector by 2025-26, based on current trends and not considering significant mitigating actions.

The analysis, published on Friday, updates the OfS's annual financial sustainability report. Its modeling is based on data submitted in late 2023 and includes changes to UK undergraduate tuition fee levels as well as the increase in national insurance contributions for employers announced in the latest Budget.

"A competitive recruitment market for UK students means some universities will lose out and will need to update their plans," says Susan Lapworth, chief executive of the OfS. "And all institutions will be alive to the impact of a sharp reduction in visa applications for international students."

According to the report, UK undergraduate acceptances through the University and Colleges Admissions Service increased slightly by 1.3 per cent year-on-year in 2024 but fell significantly short of the sector's forecast of a 5.8 per cent growth.

It also finds a substantial decline in international student recruitment, citing data published by the Home Office. Statistics show a 16-per cent drop in visa applications in 2024 compared to 2023, while the number of international students from certain countries sending large numbers to the UK has fallen by over 40 per cent, Xinhua news agency reported.

Lapworth urges universities that have not yet taken steps to secure their long-term sustainability to take "bold and transformative action to reshape institutions for the future," noting that they should not rely on student recruitment rebounding in the coming years.

/IANS