Cardiff University mentioned in report about ‘excessive risk-taking’ in UK higher education

Cardiff University has been named in a Higher Education Policy Institute (HEPI) warning about the financial risks taken by UK universities.

The report, written by Tom Richmond, has warned universities have been taking increased financial risks due to high levels of borrowing, and the rapid expansion of student numbers, threatening their survival.

The document referred to data from Higher Education Statistics Agency, which named Cardiff University has the UK university with the sixth highest borrowing levels in the academic year 2023-24, making up 65.9 per cent of its total income.

Cardiff University has denied the institution has “engaged in excessive risk-taking.”

The HEPI report suggested that UK universities have been over-reliant on international students and growth of franchised provision.

It named the University of Northampton as having the highest external borrowing levels, saying: “Excessive borrowing is another financial risk to financial sustainability, with the University of Northampton having debts equivalent to 137 per cent of its annual income.”

Tom Richmond, the author of the report and former advisor at Department of Education, said: “There is so much good work being done by so many higher education providers and academics to deliver a great experience to their students.

“But my analysis suggests that some providers have taken too many risks, ignored students’ interests and damaged the reputation of the sector by pursuing extra tuition fee income above all else.”

In recent years, higher education has been facing many and consistent financial struggles including, but not limited to, fewer international students due to stricter visa rules, and many uni’s cutting jobs and courses.

Cardiff University confirmed a deficit of £33.4 million in January 2026, after voluntary severance schemes, and the cutting of 400 jobs, as well as scrapping Ancient History, Religion and Theology courses.

The report urged the government to take action to control “the most damaging behaviours.”

It also suggested that providers should be limited to five per cent annual growth in student numbers, as well as being required to hold “capital buffers”, and observe minimum liquidity requirements in order to improve financial strength.

HEPI’s director of policy and strategy, Rose Stephenson said: “If we are serious about building a more sustainable and resilient system, it is important that we engage with this idea and foster and open, constructive debate and the sector’s future.”

via Wikimedia Commons

A government spokesperson said: “We inherited the student loans system, including Plan two, which was devised by the previous government. This government has increased the repayment threshold for Plan two loans twice in the past two years – the first increases since 2021 – and we heavily subsidise the student finance system, a deliberate investment in our young people and the economy

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“But we recognise the the war in the Middle East and the potential inflationary effect are causing anxiety. That’s why we’re capping the maximum interest rates on Plan two and three student loans at six per cent from 1st September, for the 2026/27 academic year, delivering stability and protections for graduates from escalating student loan interest.

“Since we were elected, we have been committed to supporting the aspiration of anyone who can and wants to attend higher education, including by reintroducing targeted maintenance grants to support the Prime Minister’s target of two thirds of young people taking a gold standard apprenticeship, higher training or heading to university by the age of 25.”

A spokesperson for Universities UK said: “Universities in the UK deliver high quality, world leading teaching and are a huge benefit to the economy (£265 billion in 2023) and local communities.

“Universities adapt how they deliver higher education based on student demand and how they can best deliver value for money to students and the taxpayer. In England they are regulated by the OfS to ensure students succeed at university and after they graduate.

“Universities are also doing everything they can at an individual level to manage costs, and our efficiency and transformation taskforce is supporting efforts to unlock greater efficiencies through further collaborative working. It is essential that the government works with us to put universities on sustainable financial footing and ensure this world leading sector not only endures economic hardship but also thrives.”

A Cardiff University spokesperson said: “We reject the central claim that Cardiff University has engaged in excessive risk-taking. Headline comparisons based on borrowing as a percentage of income do not reflect the underlying risk profile of long-term, fixed-rate debt supported by a ringfenced repayment strategy.

“The majority of Cardiff’s reported borrowing relates to our long-term public bond. This has a nominal value of £400 million (issued in 2015), carries a low fixed nominal interest rate of three per cent, and is not repayable until 2055.

“The University has been fully transparent about this financing approach in its annual reports and has established a dedicated Bond Repayment Fund, which is on course to accumulate the full £400 million required at maturity. This structure represents prudent, long-term financial planning rather than short-term risk.

“It provides cost certainty over multiple decades and avoids exposure to volatile interest rates and locked in historically low interest rates. Bond financing is a well-established and widely used approach across the higher education sector to support investment in infrastructure and research. At Cardiff, it has enabled major developments such as sbarc|spark and the Translational Research Hub, strengthening our teaching and research environment.

“The deficit reported for 2024/25 was planned and approved by Council as part of a managed approach to returning the university to a sustainable financial position. Through the actions taken during the year, including our Academic Futures programme, we have materially reduced the scale of that deficit. Without these interventions, it would have been significantly higher (around £65 million).

“The financial challenges we are addressing are not unique to Cardiff. The UK higher education sector is experiencing sustained pressure, with many institutions forecasting deficits as they adjust to rising costs and changes in student recruitment markets. A deficit in this context does not indicate financial distress but reflects a deliberate transition to a more sustainable cost base. We are taking proactive steps to align our cost structure with income over the medium term.

“Despite an underlying operating deficit of £33.4 million, Cardiff retains a strong balance sheet, underpinned by significant asset values and reserves. At 31st July 2025, the university’s consolidated net assets were £821 million.”

The University of Northampton has been contacted for comment.

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