One of the biggest private providers of higher education in England has gone into administration, leaving students stranded on unfinished courses and looking for alternative places to study.

GSM London, which offered undergraduate and postgraduate business courses at its campuses in Greenwich and Greenford, told its 3,500 students that all tuition, classes and exams would stop at the end of September.

The for-profit college said it had been unable to recruit and retain sufficient student numbers to remain afloat in what it described as “highly challenging market conditions”.

A GSM statement said: “Our students will be supported as far as possible while efforts are made to provide them with informed options for where they may be able to continue their studies beyond the end of the current teaching semester.

“Discussions are already under way with other higher education providers to identify options, and information, advice and guidance will be provided to students as soon as the details have been finalised.”

GSM’s demise will be seen as a blow to government attempts to open up the higher education sector to private providers as part of its marketisation of the higher education sector. It also reflects the growing financial pressures on universities.

The University and College Union, which represents university and college workers, called on the government to look again at what it described as the “funding free-for-all” around private providers.

“UCU has repeatedly highlighted concerns about the marketisation of education and the rapid increase in poorly regulated private providers,” said its acting general secretary, Paul Cottrell.

“We hope that the government finally takes note and looks again at the funding a free-for-all among private providers who enjoy a competitive advantage in being under-regulated, but will always put profit before education.”

GSM, which awarded degrees validated by the University of Plymouth, has claimed a longstanding commitment to widening access to, and participation in, higher education, offering a route to degree-level study for students from a wide range of non-traditional academic backgrounds.

With insufficient numbers, however, it was forced to seek out additional funding, securing capital cash injections of £22m in the last three years. Efforts to find a new buyer earlier this year failed and administrators were appointed.

A Department for Education (DfE) spokesperson said: “We are working closely with the provider and all relevant sector bodies to ensure the students affected are given the support and advice they need to continue their studies.

“We want a broad, sustainable market in higher education which offers students flexibility and a wide range of high-quality choices for where and what they study. Whilst the vast majority of institutions are in good financial health, the DfE and [the universities regulator] the Office for Students have been clear that neither will bail out failing providers.”