The Open University is set to shed more than 200 staff and may cut contact with students further in a bid to prevent a financial crisis caused partly by its expensive efforts to widen participation.
The university this week blamed the prohibitive costs of delivering its successful bite-sized courses, designed to attract non-traditional students, as a "major cause" of a £6 million deficit in the current financial year.
An initial prediction of a£28 million gap in the budget has been reduced with short-term cuts, but the university said "radical" cost-cutting was necessary.
"Part of the reason is the same as for all universities, such as increased National Insurance contributions and not getting as much money for inflation as we need," pro vice-chancellor Geoff Peters said. "But a major additional factor for the OU has been the cost of widening participation."
Professor Peters said the OU had attracted 8 per cent more students last year and had been particularly successful in attracting non-traditional students by offering new courses. "But it has cost much more on marketing and promotion, and it costs much more to deliver the courses."
The OU has offered more sub-degree courses that cost more to deliver and attract lower fees. "The cost has gone up, and the income per student has gone down. This is the largest single element in the deficit."
Professor Peters said the gap could be bridged in the short term with "general belt tightening" but the university had to "think radically" about the long term. "We are looking at a number of things, like whether personal contact could be done better online, and we have to look hard at a number of things in our pending tray."
Professor Peters confirmed that the university's submission to the Higher Education Funding Council for England included plans for losing 230 staff over three years through "natural wastage", but refused to rule out compulsory redundancies.
Brenda Jarvis, president of the OU's Association of University Teachers, said she was confident compulsory redundancies could be avoided. "The staff cuts should be able to be made through natural wastage provided we can make the necessary savings on non-staff costs and provided student numbers can be met, which is always a bit of a gamble."
She said OU staffing levels had increased from 3,000 to 4,000 in the past two years, after successful growth.