De Montfort University is facing a fine of more than £4 million after recruiting 1,000 more students than allowed this academic year, Times Higher Education has learned.
Last year, in response to a budgeting error, the government told universities not to recruit more students in 2009-10 than they had in 2008-09. Ministers later said universities that exceeded this limit would have their grants docked by £3,800 per additional student, and a number of universities are known to be facing fines.
Documents leaked to THE show that De Montfort had 1,113 "excess entrants" in 2009-10 and is facing a "provisional funding adjustment" to next year's grant of more than £4 million.
Last September, the Leicester Mercury reported that 300 students at the institution were staying in hotels after demand for accommodation outstripped supply. It added that new undergraduates from the local area had been denied places in halls of residence. However, the scale of the university's over-recruitment has only now become clear.
The figures will not be confirmed by the Higher Education Funding Council for England until July. But it has already said that if universities that breach the limit do not take steps to decrease student numbers, their grants could be reduced on a recurring basis. For De Montfort, this could result in a loss that is much greater than a one-off fine.
An anonymous insider who leaked the documents claimed that the over-recruitment was a strategy to make up for under-recruitment by the university in 2008-09. However, De Montfort categorically denied any suggestion that it had deliberately over-recruited students.
"The university was outside its contract band in the 2008-09 academic year and we therefore had an obligation to increase our student numbers to bring us back into our band," a university spokeswoman said. "We held discussions with Hefce about the need to migrate back into our band during the recruitment cycle."
The number of applications to De Montfort for entry in September 2009 was "unprecedented", she added.
"This was combined with the unique conditions for students around the 2009 A-level results, which led to a significantly higher than anticipated acceptance of offers. We are in discussion with Hefce and have lodged an appeal in relation to any proposed fine."
The leaked documents show that the university had been told provisionally that it should reduce its recruitment for the next academic year by about 420 students.
De Montfort recently announced that it was suspending degree courses and a number of higher national diploma programmes for entry in 2010-11, despite having already offered places on these courses to prospective students.
In a message to staff in March, Philip Tasker, De Montfort's vice-chancellor, said: "We have reviewed our process for making offers, suspended a number of courses, and will be using revised processes after results day to ensure that we stay within (the student number) target."
He added: "The issues come mainly from the popularity of De Montfort and the need to reconsider our processes as we adapt from recruiting to selecting our students."
The university spokeswoman said that the course suspensions were "unrelated to the 2009 recruitment activity".