Source · Select Committees · Public Accounts Committee
Twenty-Eighth Report - Student loans issued to those studying at franchised higher education providers
Public Accounts Committee
HC 455
Published 24 April 2024
Recommendations
2
Rejected
Publish overview of higher education delivery models and define reasonable tuition fee retention for lead providers.
Recommendation
To remain financially viable, some providers may be incentivised to increase student numbers through franchising, which creates risks for students and taxpayers. In 2022, the Committee highlighted the risk of providers being financially vulnerable. OfS analysis, published in May 2023, …
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Government Response Summary
The government agrees with the recommendation but states the OfS does not consider it possible to set a standard proportion of tuition fees for lead providers to retain due to the diversity of arrangements, though it will continue to investigate these arrangements.
HM Treasury
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3
Accepted
Strengthen direct and indirect oversight of franchised higher education providers to ensure standards.
Recommendation
The current regulatory system does not ensure sufficient oversight over franchised providers. OfS publishes conditions that registered providers must meet, and continue to meet. These are designed to protect students, assure quality, and ensure 6 Student loans issued to those …
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Government Response Summary
The government will consult on proposals to strengthen oversight of partnership delivery in higher education, setting out these proposals by January 2025, and will develop options for legislative change if required.
HM Treasury
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7
Accepted
OfS lacks transparency regarding performance of unregistered franchised providers and their partnerships.
Recommendation
OfS publishes information on a registered provider’s performance that shows whether students have completed their course and progressed into work or further study. OfS publishes information for each lead provider and any registered franchised provider. Around two-thirds of franchised providers …
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Government Response Summary
The OfS intends to share, in autumn 2024, student outcomes indicators with each lead provider that show the performance for each of its delivery partners. The OfS intends to publish student outcome indicators for a pilot group of lead providers and each of their delivery partners in 2024, and expects to follow this with publication of this data for all partnerships during 2025.
HM Treasury
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11
Acknowledged
Lack of transparency regarding tuition fee retention by lead providers in franchise arrangements.
Recommendation
The C&AG’s report indicated that some lead providers retained between 12.5% and 30% of tuition fees received for courses at their franchised providers.25 DfE confirmed that the information is not in the public domain and that students are not always …
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Government Response Summary
The government acknowledges the need for greater transparency over franchising arrangements, notes a sector-led response by Universities UK, and will ask the Office for Students to consider requiring providers to publish details on the proportion of tuition fees they retain and for what purposes.
HM Treasury
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12
Accepted in Part
High tuition fee deductions by lead providers impact student spending, quality, and support access.
Recommendation
We challenged DfE whether this level of deduction from tuition fees was acceptable. DfE emphasised that the fee taken by the lead provider should represent the value added by that lead provider.27 While noting that there is a range, OfS …
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Government Response Summary
The government will ask the OfS to consider requiring providers to publish details on the proportion of tuition fees they retain and for what purposes when the OfS next makes changes to ongoing conditions of registration.
HM Treasury
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15
Deferred
Inadequate governance and safeguards by lead providers over franchised institutions risk fraud and misuse.
Recommendation
DfE recognises that the franchising model creates risks, given it encourages providers to do new things, but accepts that some lead providers have not taken their responsibilities for governance and safeguards in their franchised providers as seriously as within their …
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Government Response Summary
The government is proposing to consult on proposals to strengthen oversight of partnership delivery in higher education, working closely with the OfS, and will set out these proposals by January 2025. They will also develop options for legislative change, if required, for a more robust model for protecting public money.
HM Treasury
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16
Deferred
Numerous franchised providers operate unregistered, including some previously denied OfS registration.
Recommendation
There is no statutory or regulatory obligation on franchised providers to register directly with OfS. The lead provider retains responsibility for a franchised provider’s compliance with academic quality, financial sustainability, governance and accountability standards. In 2021/22, 229 (65%) of the …
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Government Response Summary
The government is proposing to consult on proposals to strengthen oversight of partnership delivery in higher education, working closely with the OfS, and will set out these proposals by January 2025. They will also develop options for legislative change, if required, for a more robust model for protecting public money.
HM Treasury
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17
Deferred
DfE considers requiring all franchised higher education providers to register with OfS.
Recommendation
DfE told us that even if a provider could not meet all the registration criteria it might still be a good franchisee. DfE recognised, equally, that if providers do not pass that threshold, it would be right to question them …
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Government Response Summary
The government proposes to consult on proposals to strengthen oversight of partnership delivery in higher education by January 2025, working closely with the OfS, and will develop options for legislative change if required.
HM Treasury
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19
Accepted
Current lack of clear guidance on student attendance for loan payments is unsatisfactory.
Recommendation
We asked why, considering that student loan payments are made based on attendance data, there is no guidance on what constitutes attendance.45 DfE noted that ‘effective’ course attendance and engagement will vary by course and institution. DfE pointed to, for …
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Government Response Summary
The department published on the Student Loans Company website (May 2024) guidance on attendance management, against which providers can be held to account in relation to the release of SLC tuition fee payments.
HM Treasury
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Conclusions (18)
4
Conclusion
Accepted
DfE, OfS and SLC recognise they have a shared responsibility to tackle fraud and abuse of student funding although this is not yet fully embedded in their ways of working. In our July 2023report on tackling fraud and corruption across government, we concluded that tackling fraud cannot be left to …
Government Response Summary
The government states that a data sharing protocol and a joint incident response plan are now in place between DfE, OfS, and SLC, detailing existing collaboration on risk management and reporting, and confirming OfS has a strategic risk on its register related to data controls.
5
Conclusion
Accepted
Despite the complex regulatory system, roles and responsibilities for fraud prevention, detection and intervention are undefined. The system for paying loan monies and overseeing providers is complicated, involving multiple bodies. The Government Internal Audit Agency (GIAA) and C&AG both found that there were gaps between DfE, OfS and SLC responsibilities, …
Government Response Summary
The government confirms that DfE, OfS, and SLC have agreed a joint Incident Response plan which clearly sets out the roles and responsibilities of each organization for identifying and addressing providers of concern.
6
Conclusion
Accepted
Although SLC uses data on attendance to show student’s course engagement, and therefore pay loans, there remains no agreed definition of what constitutes attendance or engagement. SLC requires providers to confirm that students are attending their courses before it will make tuition fee and maintenance payments. However, DfE, SLC, OfS …
Government Response Summary
The government published guidance on attendance management on the Student Loans Company website in May 2024, clarifying expectations for student attendance and engagement after extensive stakeholder engagement, and will take action if providers have weak approaches.
1
Conclusion
Accepted
On the basis of a report by the Comptroller and Auditor General, we took evidence from the Department for Education (DfE), Office for Students (OfS) and Student Loans Company (SLC) on student loans issued to those studying at franchised higher education providers.1
Government Response Summary
The government states that the OfS intends to publish student outcome indicators for a pilot group of lead providers and their delivery partners in 2024, with full publication for all partnerships expected during 2025.
8
Conclusion
Accepted
OfS told us that, for full-time students doing first degree subjects, it would normally expect at least 80% of students to complete their course and progress to further study or professional employment. Across the higher education sector, around 90% of students complete and progress, compared to just over 80% at …
Government Response Summary
The OfS intends to share, in autumn 2024, student outcomes indicators with each lead provider that show the performance for each of its delivery partners and intends to publish student outcome indicators for a pilot group of lead providers and each of their delivery partners in 2024.
9
Conclusion
Universities UK highlighted that, while it is no longer a regulatory requirement in England, the 2018 Quality Code for Higher Education has advice and guidance on delivering quality within franchised provision. With the Quality Assurance Agency for Higher Education, it has been informing future iterations of the guidance which is …
10
Conclusion
Accepted
Some providers use agents or offer financial incentives to recruit students, practices that are not regulated.20 DfE told us it is planning to look at the use of agents, focusing particularly on whether there is any mis-selling of courses from agents to individuals, such as promising individuals guarantees on to …
Government Response Summary
The government will ask the Office for Students (OfS) to consider requiring providers to publish details on the proportion of tuition fees they retain and for what purposes when the OfS next makes changes to ongoing conditions of registration, and highlights the publication of a governance framework by UUK.
13
Conclusion
Accepted
In June 2022, we reported that higher education providers face long-term, systemic, pressures on their financial sustainability and viability.30 We asked about the sector’s current financial sustainability. DfE referred to the most recent OfS report, published in May 2023, which concluded that the overall financial position of the sector is …
Government Response Summary
The OfS intends to publish an Insight brief that sets out the risks and benefits of franchise arrangements, with a focus on the expectations placed on lead providers for effective management and governance of partners, and will consider financial arrangements for franchise partnerships in the scope of any investigations it carries out into the quality of franchised courses.
14
Conclusion
Deferred
Between 2018/19 and 2021/22 the number of franchised providers increased 6%, but the number of students attending them more than doubled from 50,440 (2.5% of all students) to 108,600 (4.7% of all students). Some 63,680 (59%) of the 108,600 students enrolled on business and management-related courses. The increase in students …
Government Response Summary
The government is proposing to consult on proposals to strengthen oversight of partnership delivery in higher education, working closely with the OfS, and will set out these proposals by January 2025. They will also develop options for legislative change, if required, for a more robust model for protecting public money.
18
Conclusion
Accepted
Universities UK described how it is developing a new governance framework to support providers in identifying the ‘triggers’ (through data monitoring and/or observation) which can alert them to potentially unusual or suspect behaviour. It will set expectations that providers have robust policies and systems in place to monitor, record and …
Government Response Summary
Universities UK (UUK) published governance framework for lead providers to support senior leaders in universities to spot and manage risk in franchised partnerships.
20
Conclusion
Acknowledged
The value of detected fraud in 2022/23 involving franchised providers totalled £2.2 million, 53% of the total £4.1 million fraud SLC identified.49 In our July 2023report on tackling fraud and corruption across government, we concluded that tackling fraud cannot be left to counter-fraud technical experts.50 We asked DfE whether it …
Government Response Summary
The government acknowledges the importance of addressing fraud and misuse of student funding and highlights existing collaborations and protocols between DfE, SLC, and OfS, including data sharing and incident response plans, while considering further improvements.
21
Conclusion
Acknowledged
We asked why the value of detected fraud at franchised providers has increased almost sevenfold, from £329,831 in 2018/19 to £2,163,459 in 2022/23, when the number of 43 Universities UK (ISL0002) 44 Universities UK (ISL0002) 45 Qq 39–41, 74; C&AG’s Report, para 2.19 46 Q 74 47 Qq39, 41, 76 …
Government Response Summary
The government acknowledges the increase in detected fraud at franchised providers and highlights existing collaborations and protocols between DfE, SLC, and OfS, including data sharing and incident response plans, while considering further improvements.
22
Conclusion
Accepted
The C&AG’s report noted that GIAA concluded that neither SLC nor OfS have a formal fraud enforcement role and highlighted the challenges in gaining assurance over the legitimacy of funding applications.57 DfE told us that it is looking at formal roles and responsibilities, including whether aspects needed to be strengthened …
Government Response Summary
The department has agreed a joint Incident Response plan between DfE, OfS and SLC for responding to cases where there is a potential risk to public funding which sets out the roles and responsibilities of each organisation.
23
Conclusion
Accepted
OfS told us that it has significantly stepped up its regulatory activity for certain providers that feature in the C&AG’s report. This includes additional independent audit to test whether lead provider’s internal controls work effectively in relation to franchise providers. OfS said it has also imposed additional mandatory reporting requirements …
Government Response Summary
A data sharing protocol among DfE, OfS and SLC, and a joint incident response plan, are now in place.
24
Conclusion
Accepted
SLC told us that one reason behind increases in the value of detected fraud was its investment in using data to detect issues.60 SLC uses a range of data, not just its own. To help with identifying individual-level fraud, it is now part of the National Economic Crime Centre, so …
Government Response Summary
The department and SLC already collaborate on setting risk appetite and on risk management arrangements.
25
Conclusion
Accepted
The C&AG’s report identified that a provider had raised concerns with OfS about a franchised provider in May 2022, but DfE was not informed of the issue at the time.62 We asked witnesses why DfE was not told. OfS said that, in looking back, this is clearly a learning case, …
Government Response Summary
A data sharing protocol among DfE, OfS and SLC, and a joint incident response plan, are now in place.
26
Conclusion
Accepted
DfE explained that, in response, it has established more detailed information sharing protocols. DfE, SLC and OfS meet regularly to share information earlier, including information which may not have been previously shared. DfE told us it also has an intelligence and data sharing group that meets frequently, focusing on individual …
Government Response Summary
A data sharing protocol among DfE, OfS and SLC, and a joint incident response plan, are now in place.
27
Conclusion
Accepted
DfE recognised the advantages in having transparency between the three bodies, which enables them to take a collective view across an issue.66 OfS noted that there are some legal constraints on how it can share information, so it needs to work within its legal parameters. However, it now has clear …
Government Response Summary
A data sharing protocol among DfE, OfS and SLC, and a joint incident response plan, are now in place.