As financial pressures mount across the UK higher education (HE) sector, a new report by SUMS Consulting and the Office of the Independent Adjudicator for Higher Education (OIA) calls for reforms to better protect students when institutions face closure.
In our recent post, we introduced our new collaborative study Putting students first: Managing the impact of higher education provider closure
In this part we reflect on the key findings from the study, exploring the stages of provider closure and the impact on the student community – before asking the crucial question: what needs to change?
What pushes a provider to the brink?
Closures examined in the study were primarily driven by financial instability, caused by declining student numbers, funding cuts, rising debt, and weak financial planning, though these issues were often worsened by poor governance and leadership. In some cases, the withdrawal of validation or franchise agreements by partner institutions left providers without viable alternatives. Additional triggers included reputational damage from student complaints, leadership turnover, and regulatory investigations into quality or governance.
Proactive contingency planning
Unfortunately, many providers didn’t plan ahead despite the warning signals, leading to disruptive closures badly affecting students and staff. Executives and governing bodies often lacked the expertise to manage the crisis, and some institutions didn’t even acknowledge that closure was a real possibility until it was too late. Strong leadership, early recognition and realism are key so that institutions have sufficient time (12-24 months at a minimum) to explore strategic options like restructuring, merging, or even preparing for a managed closure.
Once insolvency begins, control shifts quickly to administrators or liquidators who may not understand the complexities of HE. As one expert put it, “It’s more like a chaotic storm than a logical process.” At this stage, there is little time to plan and implement student support or continuity measures.
Therefore, early legal advice and contingency planning are essential. This includes having a clear plan in place to enable early, cross-functional coordination across legal, governance, risk, student services, finance, HR, and communications to manage closure effectively, and ensure that students receive the support they need to continue their studies at alternative institutions.
What we learned from those on the frontline
The study revealed that several closing providers lacked early warning systems, effective governance, and contingency planning, factors that contributed to disorganised and harmful closures. Leadership teams often lacked the financial and operational expertise to manage crises, while governing boards were ill-equipped to challenge decisions or navigate complex situations. Communication with students was frequently inadequate, and both emotional and academic support fell short. Validating partners were often too distant to detect or respond to emerging risks in time.
Receiving and validating institutions also encountered significant challenges. Receiving providers had to act swiftly with limited access to data, funding, and regulatory guidance, all while supporting students through disruption and distress. They called for stronger centralised support, including a transformation fund and independent brokers to manage future crises. Validating partners stressed the need for more rigorous due diligence, structured risk oversight, and clearer legal and regulatory frameworks.
Across participants in the study, there was a strong call for more tailored closure planning, making student protection plans (SPPs) scenario-based and enforceable, and the creation of shared funding models to support student transfers and reduce financial risk.
Student protection
Students affected by provider closures often experienced significant anxiety, academic disruption, and financial hardship. In some cases, relocation options were limited or unsuitable, compounding the stress and uncertainty. Although SPPs are intended to show how students can expect to continue and complete their studies if their course or campus closes, providers did not feel they could be transparent when facing warning signals amid concerns about reputational risk and making the situation worse.
We also found there can be some confusion between SPPs and student protection directions (SPDs) from OfS. Unlike SPPs, a SPD, which might include a requirement for a market exit plan, will be imposed where there is a material risk of a provider stopping all or most of its HE provision. These conditions were sometimes referred to by participants in the study interchangeably. There can also be misalignment between the SPDs, trustees’ duties and the legal duties of insolvency practitioners, as well as uncertainty around funding and enforceability in the event of exit. Finally, there is currently no published data on the long-term outcomes for these students.
Towards reform: building resilience and student protection into the system
Overall, this study highlights the need for stronger due diligence, more effective risk management, and proactive contingency planning to reduce the likelihood of closure and to manage it more effectively if it occurs. To strengthen preparedness, providers should make use of the framework, as well as the following key lessons from the study.
- Monitor proactively: Use real-time financial and enrolment data to detect early warning signs and run scenario-based simulations as part of business continuity planning.
- Strengthen governance: Train governors to understand market exit risks and strategic options.
- Plan for disruption: Establish internal crisis teams, develop teach-out strategies, and ensure IT and admin systems can support continuity.
- Build in flexibility: Identify alternative providers in advance, enable credit transfer, and embed closure planning routinely into programme or course design.
- Prioritise student protection: Make SPPs realistic, scenario-based, and legally robust, with clear rights, redress, and compensation.
- Support student wellbeing: Communicate transparently and provide tailored support, especially for students with additional needs.
- Maintain accurate records: Ensure student data is up to date to support smooth transitions, and involve students’ unions in crisis planning.
- Oversee partnerships: Validating providers should monitor partner risk, appoint liaison roles, and clarify legal responsibilities during distress or closure.
Conclusion: A call for cultural and structural change in higher education
This study, informed by insights from sector experts, reveals a sobering truth: the UK higher education sector remains largely unprepared for provider market exits. A fundamental cultural shift is needed that recognises no institution is “too big to fail,” learns from past experiences, and puts student protection at the forefront in the event of failure.
To support this shift, SUMS has made 30 recommendations in the report for government, regulators, and providers and their governing bodies. Our recommendations aim to help institutions navigate the complexities of market exit while ensuring students remain the central priority.
- Currently, students are not adequately protected in the event of provider closure. We therefore urge Government and regulators to consider legal and regulatory reforms to address this gap.
- In addition, stronger sector-wide coordination and support mechanisms are needed to assist both providers and students during periods of instability.
- Clearer and more proactive guidance is also essential to help providers identify early warning signs, assess their options, and plan effectively for potential closure.
- Boards and executive teams should embed earlier and more robust contingency and scenario planning into routine governance and risk management practices.
Adopting this shift in mindset and practice will lead to a more resilient sector and ensure stronger protection for students.
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Haven’t read Part One yet? Discover the report and framework
For more information about the study please contact consulting@sums.ac.uk.
About SUMS
SUMS is a membership, not-for-profit organisation and registered charity, owned by our member universities. We work side-by-side with our members, clients and partners, to help them be better, more effective organisations. Our expert team can support providers with many of the areas discussed in the report, including the following:
- Reviewing and advising on approaches to governance effectiveness, efficiency
- Executive and governing body facilitation, bespoke training and ad hoc advice
- Risk management
- Scenario and contingency planning
- Development of institutional dashboards, including identification of warning signs (trigger points/stress testing)
- Portfolio mapping, to identify and understand complexities
- Portfolio and course Costing
- Student support and wellbeing in times of institutional uncertainty
- Strategic communications planning
- Ongoing mentoring and critical friend support and advice within our member and client institutions to help implement and successfully embed change.
For more information about how SUMS can support providers, please see: What we do – SUMS or get in touch for more information at consulting@sums.ac.uk
