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UK faces higher education debt crisis

Cardiff University borrowed 300 million at 3% over 40 years. (Source: Dai Lygad via Flickr)

By Hallum Cowell

There is an imminent higher education debt crisis as many higher education institutions, including Cardiff University, could be in financial trouble.

Ministers have been worried by the scale of the debt many Universities are buried under. Recent figures show that UK universities borrowed on average £12 billion since the 2008 financial crash.

The universities borrow from banks, private investors and the international bond markets. Reuters published their International Financial Review which highlighted the debt of universities such as Cardiff, Liverpool and Cambridge.

Cardiff University borrowed £300 million at 3% over 40 years. Student debt is also poised to rise from the current £100 billion to a trillion pounds.

Not only are universities responsible for education but they boost the economy, generating £95 billion and £12.5 billion in exports. Cardiff and cities like it that host universities benefit immensely from the influx of students.

Ministers are yet to act on two crucial issues, however – reforming student debt and the treatment of foreign students by the home office.

Michael Barber, the head of the university regulator, the office for students (OFS), insisted the government would let higher education institutes in financial trouble go to the wall.

Barber said the OFS will not bail out providers in financial difficulty.

“This kind of thinking – not unlike the ‘too big to fail’ idea among the banks – will lead to poor decision-making and a lack of financial discipline, is inconsistent with the principle of university autonomy and is not in students’ longer term interests,” Barber told the Wonkfest higher education festival in London.

Barber added: “Should a university or other higher education provider find themselves at risk of closure, our role will be to protect students’ interests, and we will not hesitate to intervene to do so. We will not step in to prop up a failing provider.”

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