Millions of pounds are being fraudulently claimed from Britain’s university student loan system by fake students who have no intention of studying at an academic institution, according to an investigation by The Sunday Times.
Education Secretary Bridget Phillipson has announced that the Public Sector Fraud Authority will be investigating the suspected exploitation of the system. Writing for the newspaper, Phillipson said the allegations point to “one of the biggest financial scandals in the history of our universities sector”.
What fraud has been uncovered?
Thousands of people have reportedly fraudulently claimed a student loan by enrolling on degree courses, despite having “absolutely no academic intent”, and no intention of paying the loan back, said The Sunday Times.
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The paper’s investigative reporters reviewed leaked financial documents and company accounts, and interviewed sources in the Student Loans Company (SLC), the Department for Education and the Office for Students, as well as university lecturers.
Where is the fraud happening?
The majority of suspect students seem to be enrolled at so-called “franchised universities” – small colleges that provide courses for established universities. It is thought, the paper said, that there are at least six franchised providers where fraudulent claims from students have been identified.
These franchised providers often have low, or almost no, entry requirements. Some franchised colleges are reportedly enrolling international students “who cannot speak adequate English or accepting screenshots of Duolingo tests as proof of English proficiency”, said the paper.
Students on these franchised courses can access funding from the SLC, the government-owned body responsible for issuing loans and grants. The tuition fee is paid to the course providers but the maintenance loan is paid directly to a student’s bank account.
Loans are meant only to be paid out if students attend their courses, but there are concerns that some franchised providers and lead universities are not properly monitoring attendance, allowing students to enrol in courses they have no intention of attending. Loans are only repayable when a student leaves and earns more than £25,000 a year; the debt is wiped completely after 40 years.
Who is committing student loan frauds?
In 2023, the SLC’s fraud unit became concerned about the rising number of Romanian students applying for its loans. Leaked figures revealed that Romanian student loan applications have increased dramatically, from 5,000 in 2015-16 to 84,000 in 2023-24, suggesting, said The Sunday Times, that “15% of the Romanian population in Britain was paid a student loan last year”.
While not all these applications are thought to be fraudulent, the number of Romanian applicants is notably higher than those of other nationalities. This could be partly due to “organised recruitment” on TikTok, with Romanian influencers targeting their compatriots with advice on how to access student loans in the UK.
How much money is involved?
More than 3,500 suspicious loan applications, totalling nearly £60 million, were identified by the SLC in the 2022-23 academic year. The company spotted multiple applications “involving fake documents and address duplication”, said the paper.
However, according to documents seen by The Sunday Times, there could now be “far greater levels of potential fraud, with estimates that it could run to hundreds of millions of pounds”.
What next?
The Department for Education said that it would “stop at nothing to protect public money”, and that any potential misuse of student loans “is an insult to hard-working students striving for better opportunities”.
The government’s Plan for Change, announced by Keir Starmer in December, “will restore trust” in the UK’s universities, a DfE spokesperson said. “We will overhaul regulation so the Office for Students better protects taxpayers’ money. In the meantime, we have asked the OfS to clamp down on franchising.”
