The Association of Colleges (AoC) has said it supports the banning of subcontracted loan-funded provision from 2017/18.
The Skills Funding Agency (SFA) first announced on Monday that advanced learner loans would have to be delivered directly by lead providers after the next academic year.
It explained in its Update bulletin two days later that the decision followed “a review of subcontracted loans delivery and learner and sector feedback” and would “protect the interests of learners who use loans for their training, and public funds”.
“We have allowed an 18-month period to enable lead contractors and current loans subcontractors to transition to the new arrangements,” it added. “This will minimise any disruption for current learners, whose loans-funded training is subcontracted.”
The AoC has now backed the move.
A spokesperson told FE Week: “It’s important that people taking out student loans get the right advice and are completely clear about who is teaching their course, so there’s a case to remove sub-contracting from the FE loan scheme.
“There’s been a similar, though voluntary, shift away from sub-contracting for loan-supported provision in higher education.
“It is right that SFA has given advance notice of the change, because this gives time for colleges and providers to rearrange their activities and also to run through the implications for officials.”
The SFA said delivery of all loans-funded subcontracted learning aims had to be completed by July 31 next year.
Providers should also “not enter any new subcontracting agreements for the delivery of loans funded provision in 2016 to 2017, over and above those which they are already be engaged with in 2015 to 2016,” it added.
Meanwhile, in 2016/17 “any provider which holds a loans facility directly with the SFA cannot also act as a subcontractor to another prime contractor for the delivery of loan funded provision.”
The agency has been contacting existing loans subcontractors “whom it considers may meet its criteria to access a loans facility directly”.
These organisations could, where applicable, be invited to apply for a direct loan facility for the 2016/2017 funding year.
It comes after SFA funding and programmes director Keith Smith warned college leaders last November they needed to face up to a future without sub-contracting loans.
But Stewart Segal, chief executive of the Association of Employment and Learning Providers told FE Week: “Where a subcontracting [loan] arrangement works for both a prime and a subcontractor and more specifically the learner then those arrangements should be allowed to continue, as they allow for greater learner choice.
“We should therefore monitor the situation over a longer period before making any changes.”
There were 75,400 learners with a 24+ Advanced Learning Loan in 2014/15, as revealed in the January Statistical First Release. It represented an increase of 28 per cent on 59,100 in 2013/14, but that is still thought to be well below the government’s target take-up.