Source · National Audit Office

Investigation into student finance for study at franchised higher education providers

Published: 18 Jan 2024 Recommendations: 10 Type: Value for Money NAO confirmed: 10 Department: Department for Education

Governance and oversight of franchised higher education provision needs to be strengthened following instances of fraud and abuse in the sector.

Dept: Department for Education Topics: Education, training and skillsFraud and errorFurther and higher educationMoney and tax nao.org.uk →

Recommendations

10 items

10 accepted 8 implemented 2 in progress

Rec	Recommendation	Addressee	Acceptance	Implementation
1	as a matter of urgency OfS and DfE should jointly reiterate to the higher education sector its role in preventing fraud and abuse, and particularly to lead providers that they bear direct responsibility for the governance and management practices of franchised providers. They should also consider the effectiveness of communications across the higher education sector to develop an ongoing engagement plan to help reinforce respective responsibilities. Ref Page 10, paragraph 20, point a · Implemented 03/2024	Department for Education; Office for Students	Accepted	Implemented ✓ NAO
10	more systematically share data and testing results, such as from statistical testing to identify anomalies or targeted sampling of provider data audits, to better understand risks and focus investigative work Ref Page 11, paragraph 21, point j · Implemented 02/2024	Office for Students; Student Loans Company	Accepted	Implemented ✓ NAO
2	establish a common anti-fraud and corruption culture and risk tolerance by, for example, encouraging the reporting of fraud and corruption and embedding discussions in risk management forums Ref Page 10, paragraph 21, point b · Implemented 08/2025	Department for Education	Accepted	Implemented ✓ NAO
3	take a systems-based approach to mapping out its, SLC?s, and OfS?s formal responsibilities for protecting student loan funding from the risk of fraud and abuse, making any legislative changes as required. As part of this, it should ensure responsibilities are agreed with respective parties, for example in a published memorandum, and ensure individual bodies have sufficient means to mitigate their respective risks to a tolerable level Ref Page 11, paragraph 21, point c · Implemented 05/2026	Department for Education	Accepted	In progress ✓ NAO
4	explicitly consider the inherent risks associated with using franchised providers, and the extent to which they represent value for money, setting out how it will manage these risks. This should include consideration of both its risk exposure across the higher education sector and the benefits franchised providers can generate by broadening higher education participation Ref Page 11, paragraph 21, point d · Implemented 02/2024	Department for Education	Accepted	Implemented ✓ NAO
5	draw on relevant evidence, improving this where necessary, to decide on the best way to address weaknesses across the governance and regulatory framework. This should include consideration of whether all franchised providers should register with OfS, and whether to give OfS and SLC enhanced powers to intervene such as a power to review or audit franchise arrangements Ref Page 11, paragraph 21, point e · Implemented 02/2024	Department for Education	Accepted	Implemented ✓ NAO
6	develop further guidance for providers explaining what constitutes meaningful student course engagement and how it expects providers to self-assure data. As part of this, DfE should consider what SLC and OfS need to better assess the quality of provider data, and what SLC needs to have sufficient assurance over student payments Ref Page 11, paragraph 21, point f · Implemented 05/2024	Department for Education	Accepted	Implemented ✓ NAO
7	consider options to limit the amount of money at risk from fraudulently claimed maintenance loans by, for example, making monthly rather than termly payments as fraudulently claimed payments are difficult to claw back Ref Page 11, paragraph 21, point g · Implemented 12/2026	Department for Education	Accepted	In progress ✓ NAO
8	increase activity to raise awareness among lead providers of the risks and benefits associated with using franchised providers. This could include sharing good practice and setting out the consequences (including student loan funding being recovered or commercial damage) should concerns be identified after payment Ref Page 11, paragraph 21, point h · Implemented 09/2024	Office for Students	Accepted	Implemented ✓ NAO
9	following DfE?s ongoing review of higher education controls, in 2024 share with all higher education providers good practice and advice on how to ensure those signing-up for courses are not being mis-sold courses or loans, particularly where recruitment agents and incentive payments are used Ref Page 11, paragraph 21, point i · Implemented 09/2024	Office for Students	Accepted	Implemented ✓ NAO