Three-year residential degrees are likely to be limited to undergraduates at top research universities because of public spending restrictions, it was claimed.
The study by Universities UK, which represents vice-chancellors, suggests the emergence of a two-tier higher education system in the future as universities struggle to accommodate large numbers of new students.
The conclusions – published to coincide with the group’s annual conference – come weeks after record numbers of students were rejected from university.
As many as 180,000 applicants failed to get on to degree courses this summer following a huge rise in applications combined with an effective freeze on new places.
This week, the Organisation for Economic Co-operation and Development warned that the UK had slipped from third to 15th in a global league table for the number of graduates being produced in each country.
Prof Geoffrey Crossick, vice-chancellor of the University of London, said the current system of delivering higher education was “no longer financially sustainable”.
In a UUK report, he said the number of flexible courses – including part-time study, on-the-job training and internet-based qualifications – would “explode” in the future.
This would lead to a drop in the proportion of students taking full-time degrees and living in traditional student accommodation, he said, an experience that was likely to be limited to those at top universities.
“Fundamental rethinking will be needed in a world where the proportion of those who experience higher education in the traditional fashion will decline, where the range of alternatives will explode, and where the variety of providers will grow with it,” said his report.
“There will remain a core of comprehensive, primarily residential and research-based universities, but for the rest new markets and new business models will make them seem increasingly different.”
It added: "Higher education as a life-course stage will narrow to just one part of the population who experience it."
David Willetts, the Universities Minister, has already called for more students to consider apprenticeships as an alternative to university.
And the Open University, which runs courses on-line, has seen applications for degrees soar by around a third this year.
Prof Crossick said ministers would have to allow more private universities to receive state-funded students to accommodate the growing numbers of young people seeking to complete alternative degree courses.
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