The Office for Students should publish performance data for private providers of “franchised” university courses to improve transparency amid fears of fraud and abuse, MPs have said.
A report published by MPs on the Public Accounts Committee today has raised concerns about a “lack of transparency” around university courses that have been subcontracted to private providers and further education colleges.
According to the committee, course completion rates can be as low as 60 per cent at some franchised providers, compared to an average of 90 per cent across the higher education sector.
Students should have the information they need to make “well-informed decisions” such as outcome data, which the Office for Students already has access to but doesn’t currently publish.
The committee’s recommendations – which calls on the government to strengthen “direct and indirect oversight” of franchised providers – follow a damning a National Audit Office report in January which warned of increasing “fraud and suspicious patterns of activity” involving organised crime.
The committee’s deputy chair, Sir Geoffrey Clifton-Brown said: “These issues must be addressed with some urgency, as the use of franchised providers only looks set to grow.
“Indeed, concerningly the franchising out of education seems to be viewed by some providers as a way of underpinning their finances.
“The risk to the taxpayer from unchecked fraud is clear, but the systemic risks to the quality of education provided to students must also be taken in hand.”
In addition to concerns about transparency, the committee urged the government to close a “back door into the student loans system” through improved oversight.
This includes agreeing “clearly articulated” roles for The Department for Education (DfE), the Office for Students and the SLC to ensure that gaps in the “complex regulatory system” are not exploited by fraudsters and organised crime groups.
Other recommendations by the committee include requiring providers to publish summaries of their agreements with universities, to clearly state which of the university’s services students can access directly and details such as what proportion of the tuition fees providers retain.
In some cases, providers keep up to 30 per cent of their students’ tuition fees, a margin the committee called “extraordinary”.
Growing numbers of students are accessing university courses taught by “franchised” private provider companies or colleges, with this group borrowing £1.2 billion through the Student Loans Company (SLC) in 2022/23.
The number of students studying franchised university courses at private providers or further education colleges more than doubled to 108,600 in the four years up to 2021/22.
Despite making up only 6.5 per cent of the student population in 2022/23, about half of the £4.2 million in fraud detected by the SLC was by students at franchised providers.
An SLC investigation in 2022 found weaknesses in oversight of student admission and engagement with franchised providers at four universities and higher education institutions.
The company placed extra requirements for paperwork on ten franchised providers, resulting in a total of £15.2 million in loans being withheld permanently, with suspicions indicating links to organised crime groups.
Potentially criminal activity included students who appeared eligible for grant funding but lacked qualifications that met a provider’s course admission criteria, applications made through suspicious agents or loan requests that contained inconsistent personal details.
In February, the Office for Students launched an investigation into “potential concerns” over Leeds Trinity University’s subcontracting arrangements several private training providers and a college.
A DfE spokesperson said: “All higher education providers in receipt of government funding must provide value for money for the taxpayer and we will not hesitate to act if we see malpractice of any kind.
“We’re already taking action to crack down on poor-quality providers, and we’re making clear that those that use franchising understand their responsibilities and have strengthened our data sharing rules.
“We are working closely with the Office for Students and the Student Loans Company to identify and prevent any abuses of public funds.”
*The OfS investigation was into potential concerns at Leeds Trinity University, not Leeds University