A Pounds 900,000 deficit, incurred over the last academic year, is forcing Yeovil College in Somerset to shed 27 lecturers plus other non-lecturing staff.
The announcement comes only days after new figures leaked to The TES revealed at least 40 FE colleges are heading for financial crisis unless they cut costs or expand student numbers. A further 110 are falling significantly short of cash targets.
As redundancy notices were sent out at Yeovil, negotiations were continuing at Stroud College, Gloucestershire, over plans to shed 30 posts.
NATFHE regional support officer John Bryant said: "I am very concerned over the funding of rural colleges. I think there are colleges which are going to die in rural areas."
A Yeovil College spokesman admitted the college, where enrolments dropped last year, was among those suffering severely.