The finances of colleges in Scotland have deteriorated following a drop in student numbers, Audit Scotland has said.
A report has found that while colleges responded well to Covid-19, changes are needed to ensure they are financially sustainable in the long term – as well as achieving higher completion rates.
The number of students completing their course had fallen, with disadvantaged and vulnerable students the most likely to drop out.
The proportion of students dropping out of courses in 2019-20 was around one in five full-time further education students (20.8%), but by 2020-21, this increased to 27.7%.
Fewer college leavers went onto work, training or further study between 2019 and 2020 – 84.4% – when compared to 87.8% in 2018-19.
It also found that college sector funding for 2022-23 had fallen, down by 5% to £696m compared to 2021-22.
Audit Scotland urged the Scottish government to work with the Scottish Funding Council (SFC) to prepare for necessary changes.
Stephen Boyle, auditor general for Scotland, said: “The challenging financial situation facing colleges will make it difficult for the sector to balance the delivery of high-quality courses and Scottish Government priorities.
“Changes are needed to ensure the sector is financially sustainable in the long-term and more students successfully complete their courses.”
Minister for higher education, further education, youth employment and training Jamie Hepburn said: “We welcome Audit Scotland’s report and will consider its recommendations carefully. Providing people with opportunities to pursue further and higher education and to develop knowledge and skills throughout their lives is crucial and we are driving forward improvements to benefit Scotland’s economy and people.
“The Scottish Government is investing nearly £2bn in Scotland’s colleges and universities in 2022/23. We will continue to work with the Scottish Funding Council, and our colleges, to ensure funding continues to enable them to deliver high-quality education and training.
“The Scottish Employer Skills Survey 2020 points to an improving picture in relation skills shortages in line with our expectation that college teaching and skills are aligned with wider economic and community needs.
“We know some students’ learning was inevitably disrupted as a result of COVID-19. However, more than 90% of those who were unable to complete their studies in 2019-20 due to the pandemic have returned to college by 2021-22, according to the latest College Performance Indicators. Work continues to re-engage the remaining students across 2019-20 and 2020-21.”