MSPs have heard that colleges are at risk of running out of cash “by July,” and universities face an “increasing risk” to provision as budget cuts and a decline in international student tuition put constraints on further and higher education institutions.

Evidence given to the Scottish Parliament’s Education, Children and Young People’s Committee shed further light on the financial constraints on Scotland’s colleges and universities.

As part of the committee’s pre-budget scrutiny, MSPs took evidence from Colleges Scotland and Universities Scotland, the representative bodies for further and higher education institutions in Scotland on Wednesday morning.

In each case, sector leaders described yearly funding cuts from the Scottish Government and Scottish Funding Council (SFC).

Shona Struthers, Chief Executive for Colleges Scotland, said that she has “never quite seen” the college sector in its current type of financial climate.

“We have many, many of our institutions that are forecasting a deficit position.

“Cash reserves are on the decline. Some colleges are talking about having no cash of their own by July.”

This is a long-running concern for the sector. Previous reports from the SFC in January indicated that four colleges are facing “significant cashflow issues,” and that number is expected to increase to six colleges by July 2026.

When asked to identify the colleges mentioned by Ms Struthers, an SFC spokesperson declined.

“We do not disclose commercially confidential information that is shared with SFC.

"Disclosing the names of those colleges facing significant cashflow difficulties could result in undue or inappropriate speculation on the financial performance of individual colleges which could impact negatively on learners and staff.

"It could also hamper college boards in their efforts to implement a recovery plan.”

The SFC has repeatedly declined to identify the institutions in response to Freedom of Information (FOI) requests from The Herald, citing public interest and concerns that disclosing college financial projections could damage the relationship between colleges and the SFC.

This is despite references to the colleges at risk of running a deficit being raised during multiple open sessions of the Scottish Parliament, committee meetings, and MSP floor debates.

As revealed in The Herald’s State of Scotland’s Colleges series, colleges face a collective funding gap of half a billion pounds. Although some colleges have separate sources of income that are more lucrative than others, most college funding comes from the Scottish Government via the SFC.

Ms Struthers said that colleges would like to see a “restoration of funding” for the sector, adding that college students are the “least funded per head” of students at any other level of the Scottish education system.

She said it “beggars belief” that colleges don’t receive more investment, given the contributions they provide to wider society.

This includes their economic contributions, which a Fraser of Allander Institute report calculated at roughly £72,000 per student and £52 billion collectively over college students’ working lives.

Part of Scotland’s colleges' work involves helping students along articulation routes into universities to continue their degree programmes. Sector leaders said that thesse articulation partnerships are healthy, but MSPs heard on Wednesday that universities are facing their own funding concerns.

Professor Iain Gillespie, convener of Universities Scotland, said that Scottish universities “remain reliant on international students” whose tuition cross-subsidises the costs of teaching and supporting Scottish-domiciled students.

However, he added, the number of international students in universities has declined by an average of 20%. This has created a financial situation in which some universities are forced to consider changing their provision.

“Institutions are taking mitigating actions to continue to be able to function. We are well-run institutions, so I personally don’t see that there is a risk to the viability of universities going forward.

“But there is a clear and present increasing risk to equality and scope of provision.”

He called for more predictability, transparency, and flexibility from the government and SFC regarding allocations of places for domestic students and funding levels. Although the government recently cut places for Scottish students, Prof Gillespie said the number of Scottish students at universities is at an all-time high.

But despite this, the Scottish Government does not pay enough per student to fund their tuition costs, he said.

“We are far away, far away from paying the costs of tuition through government funding for Scottish-domiciled students.”

A Scottish Government spokesperson said:

“The Scottish Government is resolute in its commitment to free tuition.  The latest data shows since this policy was put in place, the number of Scottish students entering full-time first degree courses at university has increased by 31%, with  record numbers of students from our poorest communities as a result of the Scottish Government’s commitment to Widening Access to university.

“Our universities play a pivotal role in Scotland’s economy and society – and despite facing the most challenging budget since devolution, the Scottish Government will invest over £1 billion on teaching and research, including an increase in funding for research and innovation.”