New figures show up to 36% of freshers have fewer than three Ds at A-level – and would be barred under leaked proposals

Some modern universities could lose about a third of their students and face a struggle to survive if plans go ahead to stop young people with lower grades qualifying for loans, data obtained by Education Guardian suggests.

The prime minister’s review of post-18 education, due to report next month, is expected to recommend a cut to tuition fees. But another idea that has been leaked is to limit numbers by stopping young students qualifying for a loan if they get fewer than three Ds at A-level.

The proposal has sparked anger in universities because it is likely to hit would-be students from the poorest families much harder than their middle-class counterparts.

New data from the Higher Education Statistics Agency (HESA) also shows 16 modern universities in England could lose between 15 and 36% of their full-time degree students overnight, based on 2016-17 figures. Many others would also see a substantial drop. Experts say the loss of income could push struggling universities to the brink, especially on top of a cut in fees.

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Simon Marginson, professor of higher education at Oxford University, says: “A huge cut in income like this would inevitably mean that institutions would flounder, and some would be surviving on a week-to-week basis. That is bad for the sector, bad for students, bad for graduates and bad for employers. It would throw everyone into chaos.”

London Metropolitan University, whose student numbers fell by a third in the five years to 2017, according to the admissions service Ucas, would be worst hit. The data shows that 36% of its full-time degree students were admitted with fewer than three Ds at A-level or equivalent in 2016-17. It was closely followed by Bolton University, at 31%, and the University of Bedfordshire, 27%.

The PM’s review, led by the former equities broker Philip Augar, is, according to another leak, considering a cut in fees from £9,250 to £6,500, for arts, humanities and social science subjects. Science, technology and engineering degrees, which typically lead to better paid jobs, could cost up to £13,500.

Universities are not hopeful that the government will step in with extra funding to plug the gap, meaning they would lose nearly £3,000 a head for many courses. All universities are viewing this as a massive blow. But experts say it could sound the death knell for less popular institutions that are already struggling in the fierce new higher education market.

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Matt Robb, managing partner at the strategy consultancy EY-Parthenon, which advises universities, says: “If they cut fees to £6,500, some universities will bleed to death.” He argues that the government’s new Office for Students can no longer refuse to bail out failing institutions if fees are cut without new public funding to compensate. “If you slash university funding by a third you can’t just wash your hands of it all and say let the market solve the problem.”

Nick Hillman, director of the Higher Education Policy Institute thinktank, says some institutions have already had to take out bridging loans to pay staff wages while they wait for their first tranche of this academic year’s fees from the Student Loans Company. “If you push them over a cliff, what looks like a moderately popular policy of cutting fees suddenly becomes a major political scandal. There could be a dozen universities in serious trouble.”

Hillman is fiercely opposed to the proposal to limit entry to those with three Ds and above, which he says would “dramatically damage overnight the government’s plans to get more working class young people into university”. He predicts it would finish off some troubled institutions. “To lose that many students would be a massive blow to an institution. If you had an exceptional VC who had somehow prepared for it, or valuable properties in central London, you might survive it. But many institutions aren’t in that position.”

Marginson says the fallout from one or more universities going bankrupt would be profound, hurting current students and “trashing” the degrees of all previous graduates.

“Generally a university is one of the biggest employers. It’s like closing a hospital – losing it would change the environment and make it a harder place to live in. These aren’t just businesses, they are public institutions that are subsidised by the state for good reason.”

Steven Cummins, professor of population health at the London School of Hygiene and Tropical Medicine, one of the world’s leading centres for public health research, says he would not have made it to university at all had there been a cut-off based on A-level grades.

Cummins, who has advised the Department of Health and the Food Standards Agency, got two Es and a U at grammar school in Southend, Essex. He says he wasn’t mature enough to work hard.

He retook his A-levels at college in the evenings, doing an office job in the day, and pushed his grades up to CEE. Happily, it was enough to get on to what he describes as a “transformational” geography degree at his local HE college, now the University of Gloucestershire.

“I finally found something I enjoyed and was good at,” he says. “Starting again in a completely different environment meant no one had any preconceptions and that was hugely liberating.”

Cummins was the first in his family to go to university. His dad was a builder and his mum was a clerk. He says the advantages it has given him have been huge.

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“There are always people who, for whatever reason, don’t achieve their potential at the age of 18,” he says. “I think that writing them off at that age and not giving them the opportunity to experience the transformative power of higher education is a huge mistake.”

Prof Graham Baldwin, vice-chancellor of Southampton Solent University, where 18% of students had A-levels below three Ds in 2016-17, says he is “frankly horrified” that this policy is on the table.

“We’ve been monitoring students’ achievements and in 2017 more of our graduates who came in with three Ds or less were in professional or managerial roles than those who got three Cs or better.”

Prof David Phoenix, vice-chancellor of London South Bank University, where 19% of students have fewer than three Ds, said writing off applicants based solely on their school results was “morally abhorrent”.

He doesn’t think accepting lower grade applicants is a stigma for universities such as his, which serve disadvantaged communities. “We are in the bottom quartile for entry qualifications but we are in the top four universities in the country for graduate outcomes and in the top 10 for graduate salaries.

“A student’s performance in school is often not an indicator of their performance at university, especially when they are studying a subject they really enjoy, taught in a way they haven’t experienced before,” he says. “We work very closely with industry so it feels relevant, and we work hard at building their self-confidence.”

• This article was amended on 15 January 2019 because an earlier version misnamed the University of Gloucestershire as the University of Gloucester. This has been corrected.