Higher Education On Brink: Khyber Pakhtunkhwa's Universities Crippled By Financial Collapse

Once hailed as the bastion of enlightenment in the northwestern frontier, public universities in Khyber Pakhtunkhwa (KP) are now reeling under a financial crisis that threatens to unravel decades of academic progress

PESHAWAR, (UrduPoint / Pakistan Point News - 2nd Aug, 2025) Once hailed as the bastion of enlightenment in the northwestern frontier, public universities in Khyber Pakhtunkhwa (KP) are now reeling under a financial crisis that threatens to unravel decades of academic progress.

Beneath the surface of political wrangling and underfunded reforms, lies a worsening fiscal catastrophe that is hollowing out the very foundations of higher education in the province.

At the heart of this crisis is the University of Peshawar (UoP) which is a flagship institution established in 1949 in line with the will of founder of the nation Quaid-e-Azam Muhammad Ali Jinnah.

With an annual deficit now exceeding Rs 1.5 billion, the UoP finds itself almost financially paralyzed. Months of its unpaid salaries and pensions have plunged faculty, staff, and retirees into uncertainty.

“On July 17 last, not a single penny was paid to pensioners,” one UoP employee told APP. “Dozens of our colleagues went home empty-handed on payday. Some haven’t received their dues since 2022.”

The UoP is not alone. A growing list of institutions, including UET Peshawar, Gomal University DI Khan, Agriculture University Peshawar, and University of Science and Technology Bannu, are all facing crippling budget shortfalls.

According to the KP Universities 2021-24 Report, the opening balance of universities' budgets dropped from Rs 6.56 billion in 2021-22 to Rs 4.74 billion in 2023-24.

Similarly, provincial grants, which should have served as a lifeline, were slashed from Rs 3.96 billion in 2022-23 to just Rs 1.23 billion in 2021-22, with many promised funds never materializing.

"This isn’t a financial misstep; it’s a systemic collapse. Over 20 universities face deficits. Over 50% of their budgets are consumed by establishment costs. There is no real investment in research,” it said.

In fiscal year 2023–24, the total expenditure of all 34 public sector universities in KP touched Rs 41 billion, yet only Rs 1 billion was allocated for research — “like salt in flour,” Dr. Zilakat Malik, former Chairman Economics Department at UoP remarked bitterly while referring to the said report.

The decline in budget allocation is not simply a reflection of economic constraints, but also the consequence of misguided political decisions. Over the last decade, KP has seen a surge in the establishment of new universities, often in far-flung districts.

Critics argue these were driven more by political expediency than academic strategy.

“Opening a university is not just about cutting ribbons,” Dr Malik said. “When resources are already strained, adding more institutions only spreads the financial crisis.”

Moreover, university assets, which could generate sustainable revenue, remain grossly underutilized or mired in disputes.

For example, Islamia College Peshawar owns over 224 commercial shops in Khyber Bazaar, while UoP holds vast tracts of land in Charsadda and Swabi assets that lie dormant, unmanaged, or in legal limbo.

The ripple effects of the crisis are already being felt in classrooms and research labs. Student enrollment in MS, MPhil, and PhD programs is declining, as faculty morale sinks and academic standards deteriorate.

Class IV employees of University of Peshawar among the lowest paid are struggling to support their families. Many cannot afford school fees or medical care for their children. “We’re the ones sweeping classrooms and cleaning labs. But who’s cleaning up this mess?” asked one worker, requesting anonymity.

Political parties have turned the issue into a matter of great concerns. Hamza Khan, PML-N President of Nowshera, laid the blame squarely on the previous PTI-led provincial government, accusing it of neglecting universities in favor of political theatrics.

“If our higher education system collapses, future generations will not forgive us,” Hamza Khan said. “How can a government that ignores its own universities claim to stand for progress?”

He said, unfortunately, the Federal government’s increased grants, which rose to Rs 10.9 billion in 2023-24, have not been properly utilized in KP to address the financial woes of universities.

For now, there is no clear roadmap out of this educational quagmire in KP.

Experts stressed that urgent structural reforms, transparent audits, and asset revitalization are needed. Without political will, however, universities may be left to decay under the weight of debt, demoralization, and administrative inertia.

As Dr. Zilakat puts it, “We are watching a slow-motion collapse. If higher education isn’t rescued now, we won’t just lose universities but we will lose a generation.”

APP/fam