More than four in 10 universities in England are expecting to be in a financial deficit by this summer, according to new report from the Office for Students (OfS).
The OfS, which regulates higher education providers, said universities were closing courses and selling buildings to cut costs, but "significant reform and efficiencies" were needed to turn the tide.
It said a drop in international students coming to the UK was the main reason for the worsening financial position.
Universities UK (UUK) said the report was "deeply sobering", while the education secretary said it demonstrated the necessity of raising tuition fees in England.
The report found that 117 of 270 higher education institutions (43%) registered with the OfS expected to be in deficit by the end of July – despite course closures, job losses and selling off assets.
This third consecutive year of worsening finances was mainly driven by a fall in international student numbers, it said, particularly following visa changes in January 2024.
The number of international students was almost 16% lower last year than previously expected, according to the report.
Universities have become increasingly reliant on higher fees from international students in recent years, as tuition fees from UK students have not kept up with inflation.
Their financial plans predict that more than half of the growth in their tuition fee income up to 2028 will come from international students – but the OfS warned that this was optimistic.
Susan Lapworth, chief executive of the OfS, told the BBC it was "not currently expecting any large or medium institutions to fail over the next 12 months or so".
She said: "Many institutions are financially secure or taking sensible steps to ensure that they're financially secure, so I wouldn't want students to be unduly concerned about these issues."
But she went on to say that the OfS was working with a small number of institutions that were "under real pressure", including ensuring they drew up plans to protect students in the event that they were forced to close.
Ms Lapworth said OfS was "constantly thinking" about when students might need to be told about the situation at those institutions, explaining: "We know that if the regulator says 'we're working with a particular university', the risk is that its financial failure is then precipitated by simply saying that."
The OfS has also said that any student going to university this autumn should expect the course to be delivered as advertised.
