Universities that were penalised for failing to meet their targets for extra student numbers last year may face further problems in the current recruitment climate, funding chiefs warned as grant allocations for English institutions were unveiled this week.
A clutch of universities has lost money for overestimating the number of students they believed they would enrol last year. They include the universities of Greenwich, Central England, Essex, Reading, Sunderland, Imperial College London, Wolverhampton, Liverpool Hope and Gloucestershire.
The underrecruitment occurred in a year of an "exceptionally high" number of applications - up by 8 per cent for the sector as whole. Institutions that overestimated their student numbers could struggle even more this year as the number of applications has fallen overall by 3.4 per cent.
Steve Egan, acting chief executive of the Higher Education Funding Council for England, said: "If these institutions find it difficult to hit the targets in a year when applications were up, they will face a challenge next year."
He said universities were given a second chance when underrecruiting students but after that they will lose funds permanently.
Greenwich has seen the biggest reduction in its grant for teaching - down £1.8 million. And the latest figures show that the number of applications for the university have dropped 6.7 per cent compared with last year.
Similar trends can be observed at Central England, Essex and Reading universities, where applications are down by 8.7 per cent, 6.2 per cent and 17.3 per cent respectively this year.
Greenwich said their miscalculation related to underrecruitment on foundation degree courses.
A spokesman said: "This is an issue in many institutions in relation to foundation degrees. Awareness at a national level of foundation degrees is building slowly. The holdback (of funding) will have no impact on our budget for this year as Greenwich was prudent in the accounting of these funds."
The funding council announced £6.7 billion in grants for universities and colleges for the next academic year - an increase of 3.4 per cent in real terms.
Of the £6.7 billion, £1.34 billion will go to research funding.
Research funding overall has seen an increase of 4.8 per cent in real terms compared with the last academic year.
The funding council will allocate £4.228 billion for teaching, an increase of 4 per cent on last year. Of this, £98 million will go towards supporting additional student numbers.
Some £341 million will go into widening participation, an increase of 21 per cent.