This report provides an overview of the forecast financial health of the HEFCE-funded higher education (HE) sector in England. The analysis covers the financial forecasts for the period 2015-16 to 2018-19, based on information submitted by higher education institutions (HEIs) to HEFCE in July 2016. Financial Reporting Standard (FRS) 102 is the new financial reporting framework for higher and further education (FE) providers for reporting periods starting on or after 1 January 2015, and introduces some significant changes in the way financial performance is reported. Financial forecasts for the period 2015-16 to 2018-19 are consistent with the new standard and are presented alongside 2014-15 financial data restated under FRS 102. The new reporting framework makes comparison difficult between forecast performance and historical trends. The accuracy and reliability of the sector's forecasts depends on the assumptions made by HEIs in response to the latest higher education reforms and prevailing market conditions. The sector's financial results for 2014-15 showed a sound financial position overall. However, there was an increasingly significant variation in the financial performance of individual higher education institutions (HEIs) across the sector. The latest forecasts, for the period 2015-16 to 2018-19, show a continuation of this trend, with a widening gap between the lowest- and highest-performing institutions and increasing variation of forecasts in the sector. Three annexes are included: (1) Detailed analysis of financial forecasts; (2) Changes to 2014-15 following FRS 102 conversion; and (3) Sensitivity of financial forecasts to changes in key assumptions.