Over half of Student Loan Company fraud found at franchised HE providers

Over half the fraud detected by the Student Loans Company was at franchised higher education providers, an investigation has found.

The National Audit Office (NAO), the UK’s public spending watchdog, led an investigation into the fraud and abuses of higher education student loans.

The investigation was initiated after the Student Loans Company (SLC) and the Office for Students (OfS) detected several instances of fraud in early 2022, and the Government Internal Audit Agency (GIAA) reviewed the regulatory arrangements for student loans.

53% of the £4.1 million fraud in 2022/23 was at franchised providers, whose students make up just 4.7% of the total student population

The investigation found that 53% of the £4.1 million total amount of fraud in 2022/23 was at franchised providers, whose students make up just 4.7% of the total student population. 

The number of fraud cases may be even higher, given that 65% of the franchised providers are unregistered with the OfS.

Franchised providers are institutions that teach courses on behalf of partner-registered higher education providers like universities.

SLC has challenged 3,563 suspicious applications associated with 10 providers

Some providers enrolled students uninterested in completing a course but who could apply for student loans so that they could gain tuition fee loans of up to £9,250. 

In some cases, agents were commissioned to sign up students, whilst others involved organised crime, identity theft, and false documentation.

The SLC has challenged 3,563 suspicious applications associated with 10 providers and £59.8 million of student funding.

The number of students at franchised providers has more than doubled since 2018/19, but the proportion of fraud cases in those providers has “increased faster”, the investigation report suggested. 

“The Department for Education, Student Loans Company and Office for Students should work together to share data to investigate any anomalies and raise awareness among providers of their responsibilities as a matter of urgency”

-Gareth Davies, Head of NAO

The NAO urged the government to address weaknesses contributing to the fraud and consider  “inherent risks” associated with the franchised providers. 

Gareth Davies, head of the NAO, said: “Franchised higher education providers can play a role in broadening higher education participation, but weaknesses in the regulatory framework have led to fraud and suspicious patterns of activity within the sector.

“The Department for Education, Student Loans Company and Office for Students should work together to share data to investigate any anomalies and raise awareness among providers of their responsibilities as a matter of urgency.”