As big boys form alliance, writing is on the wall for small players

I have been working in higher education institutions for more than three decades. In those 30 years in the United Kingdom and Malaysia, I have not seen such a difficult environment for higher education.

In the United Kingdom the Office for Students has forecast that around 43% of these institutions are likely to report deficits in 2025–26. Of the 119 providers, 24 are potentially at risk of exiting within 12 months.

Some are already merging. Kent and Greenwich universities have launched the London and South East University Group starting this year and King’s College London and Cranfield University have plans for 2027.

In the United States analysis by EY-Parthenon identified 442 vulnerable private nonprofit colleges and universities and about 26% of more than 1,700 institutions could close or merge within 10 years. More than 120 were placed in the highest-risk group, collectively serving around 670,000 students.

In Japan demand for university places could fall to 460,000 by 2040, only 73% of current capacity. More than 40% of private universities are reportedly operating at a deficit, with regional institutions most at risk.

In global markets many institutions depend heavily on international students. The problem is that visa restrictions, geopolitical tensions, falling domestic enrolment and heavy debt have quickly destabilised this model.

In Malaysia my research with the Penang Institute highlighted these risks a decade ago. There are currently around 1.3 million students in public and private higher education institutions. International enrolment is around 160,000, or 12.3%.

This looks strong but data from the higher education ministry shows that the number of private institutions fell nearly 15% from 436 in 2019 to 371 in 2025. This decline reflects mergers, change in status and registration adjustments, not just closures.

The main causes are demographics, costs and gig-economy opportunities but artificial intelligence (AI) will accelerate the crisis as students increasingly reject expensive programmes built around generic learning models and assignments in favour of cheaper, flexible learning not built on knowledge delivery alone.

In this very competitive market, it is trusted brands that will survive, as well as institutions with strong finances or donors, distinctive programmes, industry partnerships, personalised learning, flexible credentials and lifelong learning.

The new Triple Alliance between Sunway University, Monash University Malaysia and Taylors in the education hub in Bandar Sunway aims to address these challenges.

The logic is that by pooling academic, technological and infrastructural resources the three universities can build strong foundations for themselves and strengthen Malaysia’s position as a regional talent and innovation hub.

Resource pooling, combining student and staff numbers allows the three universities to explore joint research grants, share facilities and build new cross-institutional programmes.

It can also break down internal silos and exchange entrepreneurial and management best practices. Eventually they can launch joint multi-disciplinary initiatives leveraging each other’s strengths.

It aligns with Malaysia’s development goals to target “high-value”, finance-generating sectors in AI and digital, health and sustainable technologies. This fits in well with the recently-launched Malaysia Higher Education Blueprint 2026–2035.

It also builds scale to attract regional talent and industry partnerships and generate sustainable revenue and cost efficiency.

As such this alliance has real benefits but it will also consolidate market share and prestige in these elite member institutions.

This poses a real challenge to smaller private universities who must create smart alliances, mergers and takeovers to survive. I said this 10 years ago — but who listens to me?

The views expressed are those of the writer and do not necessarily reflect those of FMT.

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