Colleges in Scotland are facing a range of increasing financial challenges, according to the latest report from Audit Scotland for 2024/25. 

Despite an increase in Scottish Government investment for colleges in 2026, Audit Scotland has recognised that overall funding for colleges still remains 7.5% lower in real terms than in 2021.

The Audit Scotland report also notes that: 

• Scotland’s 19 incorporated colleges reported a collective £5.6 million deficit in 2024/25 – up from £1.9m in 2023/24.
• Five colleges needed a cash advance from the Scottish Funding Council in the same year – three more than 2023/24.
• The sector has cut its workforce by 13% since 2019 to reduce costs – compared to a 12% increase across the devolved public sector in Scotland.
• Student numbers dropped by 40,000 (15.9%) between 2022/23 and 2024/25. However, the proportion of students successfully completing courses rose in 2024/25, with 95% of students satisfied with their college experience.

Gavin Donoghue, CEO of Colleges Scotland, said: “Today’s Audit Scotland report recognises the extremely challenging financial position colleges continue to operate in due to the 7.5% real terms cut to government investment. During 2024/25, an increasing number of colleges needed to rely on short-term support to balance the books. This is a clear sign of a sector still under considerable financial pressure. 

“For several years, colleges have worked hard to manage these significant financial pressures, reduce costs, and protect the quality of learning and teaching. It is notable that colleges have already cut their workforce by 13% since 2019, compared to a 12% increase across the devolved public sector in Scotland. 

“It is a real credit to staff that, despite growing financial pressures, colleges have still increased the proportion of students who successfully completed their courses, and supported a high proportion of students into positive destinations. However, despite every effort to protect the college offer, a reduction in 40,000 college students over two years is the wrong direction of travel for our sector and our economy. 

“Audit Scotland also notes the additional £84.6 million still to be distributed to colleges over the next two years of the Spending Review period. This is significant as colleges need confidence that this years’ additional government investment will be sustained and built upon in the next Scottish Government Budget.”

Colleges Scotland, the Scottish Funding Council and the Scottish Government are working together to deliver the College Sector of The Future workstream, which the Auditor General notes as key in progressing his Recommendations from 2025.