UNIVERSITIES have been warned they face a credit crunch amid high levels of borrowing and an uncertain Brexit.
Nick Hillman, director of the Higher Education Policy Institute (HEPI), said universities were in a "perfect storm" compounded by the upcoming British government review into tuition fees and a fall in the number of 18-year-olds.
He said the higher education sector could be hit by a credit crunch within the next few years, estimating around a dozen institutions will likely be "on the sharp end".
The total debt owed by the sector UK-wide rose to £10.7 billion in the year ending July 2017, according to the latest available data from the Higher Education Statistics Agency.
Mr Hillman said there was now a consensus that universities were "borrowing too much" after a pendulum swing from a few years ago.
He said: "It's a turbulent time in the university world at the moment, because of Brexit, worries about international student numbers and the big review into tuition fees that's going on.
"Universities are in the middle of a perfect storm and they have been borrowing quite a bit of money in recent years."
He said the institutions in most financial peril were those with large deficits and falling student numbers over consecutive years.
He added: "If you are a lender you are not going to willingly lend a lot of money to universities you think might not exist in two to three years' time."
Mr Hillman also said analysis for HEPI showed there would be a "dramatic" drop-off in the number of EU students after Brexit.
The Office for Students (OfS) watchdog said borrowing was one of institutions' financial commitments it examined to assess their "financial viability and sustainability".
Sir Michael Barber, head of the new regulator, has previously warned institutions not to assume they are "too big to fail" if they get into financial difficulty.
He said it would not bail out universities where bosses had made misjudged financial decisions.