Universities are relying on short-term loans to stay afloat, according to recent reports. In fact, at least three educational institutions are close to filing bankruptcy. Because of stricter immigration policies and a reduced number of enrolments, universities are facing a tough economic picture. In many of these instances, schools are seeking bridging loans to keep them from closing their doors.
A Bad Time for UK Universities
In this day and age, a university is more likely to close than any other time in history. Many of the institutions are depending on bridging loans to sustain them whilst waiting on the receipt of student fees. One of the universities on the South Coast is already speaking with insolvency lawyers. Because of major government reforms, many of the institutions are finding it harder and harder to survive.
Why Bridging Loans Are Being Used
One of the reasons that bridging loans are being used is the removal of the cap on the number of students attending university. Also, an increase in tuition fees has made it difficult to remain reasonably competitive.
Lower Entry Requirements
In turn, many of the institutions have lowered their entry requirements. Many of the universities close to bankruptcy are not located in areas that are attractive to students. Some of the universities are smaller and are situated near more popular educational alternatives.
Dwindling Student Bodies
Some of the universities at financial risk have seen their student bodies dwindle in the last few years. According to financial experts, universities that are experiencing bankruptcy should seek to sell real estate or land to avoid going through the process.
Any Moves Must Be Made with Care
On the other hand, some unions have warned that this type of move may be devastating to people living in the community. After all, the presence of a university usually is the hub of most communities. Therefore, any attempts to avoid bankruptcy should be carefully considered. The spending power of staff and students is crucial to communities as well as a school itself.
The Lifeblood of a Community
Any university that has a problem with attracting students or with balancing its books needs to consult with an accountancy professional about its status. Everything needs to be reviewed, including how government regulations have affected the school’s ability to attract students and provide the needed educational resources. Universities can be the lifeblood of a community. That is why they need to review how they can better use their influence to retain students and interest in their programmes.
Taking an Audit and Cutting Costs
Universities today need to take an audit of their facilities and focus on what they can do to cut costs and still attract students to their sites. When the use of bridging loans becomes necessary, schools need to regroup and see how they can respond more positively to the government regulations that have been placed on them. This is a critical time for higher education in the UK and a challenge for institutions that needs to be directly addressed and not ignored.