The research, conducted by outsourcing firm Capita’s further and higher education business, also reveals that 52% of those questioned believe the greatest savings can be made through the better use of staff and facilities. Some 23% considered administrative processes to hold the highest potential for efficiencies, while 16% highlighted new business models, such as mergers or shared services.

The findings come as colleges face increasing pressure from the tough economic landscape, which is also having an impact on their learners.

George Layfield, UK sales manager for Capita Further and Higher Education, said: "Each student drop-out can represent between £5000 and £10,000 of lost funding and recruitment costs yet, despite this, some rates remain as high as 20%."

Capita's survey was undertaken for the launch of its new white paper, ‘The Vice Principal’s Guide to Efficiency: How Technology Can Help Cut Costs for FE Colleges’, which highlights how colleges can make up to £2 million worth of savings.

The white paper suggests how £1m can be saved from improved student management, £750,000 from using staff and facilities to their maximum efficiency, £500,000 by maximising income, and £25,000 from streamlining management and administration.

"The survey reflects colleges’ on-going concerns over budgets and the need to make savings while protecting the student experience," added Layfield.

"The white paper sets out how relatively straightforward strategic changes such as increasing class size and having easily accessible, accurate date can have a huge impact on the bottom line without having a negative impact on learning."

Natalie Thornhill

Copies of Capita’s white paper can be downloaded from www.capita-fhe.co.uk/whitepaper