Students applying for loans will need to pass an English language test as part of a government drive to prevent millions of pounds of fraud. It follows warnings that criminals are exploiting the higher education finance system, which provides students with loans for tuition fees and living expenses. Scams include enrolling at colleges simply to obtain a loan, with no intention ever of paying the money back.
Organised Gangs and Franchised Providers Under Scrutiny
Investigations have uncovered organised gangs mass-recruiting “students” from countries such as Romania. Some smaller colleges have also been accused of enrolling students who are clearly incapable of completing their studies because they are not fluent in English. There is particular concern about franchised providers, which are usually small colleges teaching degree courses overseen by another institution such as a large university. A National Audit Office inquiry found more than half of known fraud involved a franchised provider, even though they only teach around 6% of students.
Extent of the Fraud
Investigators employed by the Student Loans Company uncovered fraud of £30 million in one year, although it is believed that more goes undetected. A total of 7,396 cases of “misrepresentation in student finance applications” were uncovered over three years, according to the Department for Education. In one case reported by the National Audit Office, an un-named university investigated one of its franchised providers and found 1,389 students were not producing their own assignments. The NAO described these as “students who were enrolled with a provider but who had fraudulently submitted assignments and who could not, in that context, be viewed as having the genuine intention and ability to study.”
Government Response: Consultation and New Rules
The Department for Education is now set to launch a consultation looking at options for a minimum English language requirement for prospective undergraduates to access student finance, to ensure students taking on debt to earn a degree are equipped to succeed in their studies. Ministers say the government is “resolute in its commitment to protecting public money, including all types of student funding” and is working closely with the Student Loans Company and other bodies across government “to tackle fraudulent behaviour as swiftly as possible and improve controls”.
Minister for Skills Jacqui Smith said: "University can be a life-changing experience for so many young people, but there are a handful of institutions delivering franchised or out-sourced courses who are exploiting students’ ambition for a degree and cashing in on students’ tuition fees. After years of inaction, we’re going faster and further to tighten controls and make sure public money and students’ ambitions are not being exploited. We’ve already introduced new rules forcing providers with 300 or more franchised students to register with the regulator and be held to the same standards as other universities. By consulting on options for introducing a minimum English language requirement as a requirement for student finance, we will make sure students embarking on degree courses and taking on debt will actually benefit from the opportunity. We’re looking at options for legislation to limit the growth of some courses with consistently poor returns for students at some providers. The system must prioritise student outcomes over volume."
Crackdown on Poor-Quality Courses
The government has also announced plans to limit the number of places universities offer on courses that do not help people into well-paid jobs. The Department for Education also says it will crack down on the rapid expansion of franchised provision, following fears that poor quality teaching is going unchecked. Graduates earn on average around £100,000 more over their lifetime than someone of the same background and attainment who did not attend university, even after taxes and student loan repayments. But research from the Institute for Fiscal Studies found returns vary sharply by subject. Medicine and economics are the highest-earning degrees, and offer up to £400,000 in increased salary over a graduate’s lifetime, while other subjects can offer no financial return - and in some cases, graduates would actually be better off if they had never been to university.
