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Policymakers have begun to develop more concrete plans for protecting students if their university closes, but experts have warned that they could struggle to get buy-in for sector-wide schemes that only benefit a few institutions.

It has long been feared that the UK sector is unprepared for a university going bust, something that has become more likely as?financial problems mount.

All institutions have individual ¡°student protection plans¡± in place but these are seen as insufficient, with government and the regulator pushing all institutions to go further and consider?all the steps they would take if the worst happened.

Ministers are also ¡°working on legislative programmes to ensure higher education sector access to an insolvency regime¡±, according to the Department for Science, Innovation and Technology¡¯s (DSIT) annual report, published last month.

Policymakers in Westminster are keen to avoid a situation like the one at the University of Dundee, where the?Scottish government was forced to intervene?at the last minute to prevent the institution going under.

In its recently published business plan, the Office for Students (OfS) also said it plans to ¡°engage with Ucas on the potential for a bespoke clearing system for students in the case of the closure of their provider¡±.

The regulator has already been working with professional services organisations to help plan for ¡°potential market exits¡± and has imposed ¡°student protection directions¡±?on five providers?because of a ¡°material risk of closure¡±.

The?special insolvency scheme should outline a process to be followed in the event of a provider being unable to pay its debts, or all parties risk being overtaken by events,?said Matthew Atkinson, interim chief financial officer at the University of Nottingham.

¡°If you haven¡¯t got an insolvency regime that tells you what to do, and therefore what you might want to avoid, or costs you might want to avoid, and you haven¡¯t got any money, you end up in these emergency situations.¡±?

¡°At the moment, if somebody comes along and says, ¡®I can¡¯t make payroll next month¡¯, government doesn¡¯t have a way out of fixing that problem.¡±

But there are questions about the feasibility of such a scheme, given how quickly institutions can slip into decline.?

¡°The idea that the DfE can create a legal approach which allows time to protect creditors, to protect students and give students more of a precedent than just the unsecured creditors, is really difficult,¡± said Bob Rabone, former chair of the?British Universities Finance Directors Group and a consulting fellow with Halpin.?

In 2019, the government introduced a??for the ailing further education sector. This allowed the secretary of state to apply to court for an education administration order, which would appoint an administrator to oversee the college¡¯s affairs and ensure the best outcomes for students.?

It was later revealed that??on the first two colleges to enter administration under the scheme, raising questions about the cost of these initiatives to taxpayers.?

And, while an insolvency scheme might offer students more right to compensation in the face of a closure, many will be more concerned about securing their degree.?

The Office of the Independent Adjudicator for Higher Education (OIA) recently suggested the?formation of a student protection fund?to cover the expenses of those affected by closures.

But for more elite, financially secure institutions, ¡°there¡¯s no incentive to cooperate¡± with the new clearing programme or on collaborating with strengthened student protection plans, said Chris Husbands, former vice-chancellor of Sheffield Hallam University who is now the director of consultancy firm Higher Futures. ¡°That¡¯s where it¡¯s about the culture of the sector that¡¯s the problem.¡±

helen.packer@timeshighereducation.com