However, more than half of all colleges had money troubles with 33 per cent classified as financially vulnerable and 18 per cent as financially weak. The percentage of colleges in the bottom category, defined as those which "are, or may become dependent on, the goodwill of others", is still three times what it was in 1994.
The figures show a slight improvement on the previous year, with the number of "financially robust" colleges rising by 5 per cent to 49 per cent. A 4 per cent fall in those colleges classified as financially weak, was thanks in part to mergers of ailing institutions with stronger partners.
John Brennan, the Association of Colleges' head of development, said:
"There is a sense that the corner has been turned. Things are starting to get better for the sector as a whole and the proportion of colleges with problems is going down."
"But we aren't out of the woods yet. Our financial health is still far worse than universities and schools and there's no doubt we have got a huge legacy of problems to carry forward."