The fate of the University of Cumbria lies in the hands of funding chiefs as it waits to hear whether it will be fined £1 million for recruiting too many students this year.
The university took on 4 more students than allowed - the largest excess revealed in the sector to date - meaning its grant for 2010-11 could be docked by £1.01 million.
The Higher Education Funding Council for England warned institutions last year that they risked fines of £3,700 per student if they recruited above 2008-09 levels. The money will come from over-recruiting institutions' teaching grants in 2010-11.
The academic year 2008-09 was a particularly poor one for Cumbria, which was formed in 2007 by the merger of St Martin's College in Lancaster, the University of Central Lancashire's Cumbrian campuses and the Cumbria Institute of the Arts.
The institution is now pleading with Hefce to decide next year's grant on the basis of 2009-10 student numbers, which significantly overshot the 2008-09 cap.
Peter McCaffrey, vice-chancellor of Cumbria, met David Lammy, higher education minister, last week to ask him to intervene.
Tim Farron, Liberal Democrat MP for Westmorland and Lonsdale, also asked Mr Lammy to allow the university to recruit an additional 1,000 students in the next academic year.
Hefce is due to make a decision within the next few weeks. If it decides that Cumbria does not deserve to be treated as a special case, it will be another blow for the university, which is already battling a £20 million deficit.
In January, Professor McCaffrey was quoted as saying that he would seek £25 million in strategic development funds from Hefce to help restructure the university.
A Cumbria spokeswoman said the bid was "still under consideration and development".
In the meantime, the university has outlined plans to consolidate its estate, which is currently spread over multiple sites.
The spokeswoman said: "We envisage two base campuses, Carlisle and Lancaster, from where the faculties will be managed.
"Unless there are exceptional reasons to house students and staff elsewhere, these campuses will be the base for all full-time students.
"Specialist and access facilities will be provided on other sites across Cumbria and in London."
These "gateways" will be at Ambleside, Newton Rigg, Energus, Furness College and Tower Hamlets in London.
The announcement last December that Ambleside was to be "mothballed" prompted student demonstrations, but fears that Newton Rigg's undergraduate provision would be cut were allayed last week.
The university said no higher education courses at the campus would be scrapped after a review of the university's provision.
However, 58 courses out of Cumbria's total 533-course portfolio will be axed.
Of these, 28 do not have any students, while the remaining 30 will be "taught out".