Over A Dozen Universities Wrongly Spent £190m Of Taxpayers' Money On Student Loans
4 min read
Exclusive: A student loans mistake by universities has seen up to £190m of taxpayers’ money wrongly given to unaware students, PoliticsHome can reveal, leaving thousands of them facing repayment orders.
Education Secretary Bridget Phillipson said those students had been “let down” by their higher education providers and accused universities of “incompetence” and “abuse of public money”.
According to a Department for Education (DfE) letter sent this week, obtained by PoliticsHome, officials realised that providers were misclassifying weekend-only courses as in-attendance courses. Under the student loan regulations, students on weekend-only courses are not ordinarily eligible for maintenance loan support, as they are classed as distance learners.
Around 22,000 students at 15 mostly franchised higher education providers across the country are affected, the DfE estimates, with incorrect payments totalling around £190m this academic year. Ministers are now reviewing student loan regulations to "strengthen protections of public money further". The DfE declined to confirm to PoliticsHome which providers are affected.
Franchising allows universities to subcontract teaching and training to other organisations, such as colleges.
The letter states that the Student Loans Company (SLC) must now seek to “recover previous irregular payments made” from ineligible students, and will not pay their maintenance support further, which risks throwing many into financial disarray.
Phillipson told PoliticsHome: “This is not students’ fault. Too many organisations have let their students down, through either incompetence or abuse of the system. Many of these organisations lack the necessary governance and oversight to properly implement clear guidance.
“Others have used this loophole as another opportunity to abuse public money. Either way, this is not the standard I expect from our world-class university sector.
“Universities must take immediate action to support students who will face financial difficulties as a result.”
Ministers have now ordered the SLC to carry out a probe of university weekend-only courses to assess students’ entitlement to maintenance loans and grants, with students liable to repay any money given to them wrongfully.
Some of the affected universities may now attempt to move students onto weekday courses to make them eligible for future maintenance support, but they will still be required to repay their previous loan payments.
The providers have been told they should provide hardship funding to them, some of whom will likely be forced to suspend their studies as a result. The DfE has advised those students to contact their provider in the first instance.
Education Secretary Bridget Phillipson has accused the higher education providers involved of “incompetence” and “abuse of public money” (Alamy)
A Universities UK spokesperson, which represents 142 universities nationwide, said institutions would support the impacted students, who it acknowledged would find the news “deeply distressing” and said the sector had “no warning” of the SLC action.
They pointed to the fact that weekend-only students are ordinarily classed as distance learners for student maintenance loan purposes, even if they attend university in person at the weekend, while those who attend for the same period of time during the week are not ordinarily classed as distance learners.
“The rules need clarifying, and SLC should have better systems. If universities misclassified courses as being taught in person, because they were in person, but only on the two days of the week when regulations classify in-person learning as ‘distance learning’, it’s easy to see how this situation came about,” the spokesperson said.
It comes after ministers announced steps to tackle student loan abuse at university franchises in December.
Phillipson warned franchisers with 300 or more students that they will soon face mandatory regulation by the Office for Students and be required to meet the same standards as universities or be completely cut off from accessing student loan funding in 2028/29.
Legislation setting out the tougher rules is due this spring.
Philippa Pickford, Director of Regulation at the Office for Students, said universities should be prepared to offer compensation.
“If institutions intend to change the way courses are delivered, they must ensure any new teaching and learning arrangements work for their students,” she said.
“A move to weekday teaching won't be suitable for every student. Some may have specifically enrolled on a course because of its weekend delivery, needing to balance their studies with work, caring or other commitments.”
