An independent review of IT Tralee has found that its overstaffed, losing money and having cashflow issues.
The Higher Education Authority ordered a review of the institute last year amid concern over its finances.
IT Tralee currently has 3,500 students and 350 staff across two campuses in the Kerry town.
The Irish Times reports that the deficit at the college could rise to €4m in the coming years.
The concerns come at a sensitive time, as plans to merge with Cork Institute of Technology are underway.