The UK government is intensifying its efforts to regulate university franchising arrangements across England, responding to rising concerns about fraudulent practices exploiting the student loan system. Announced by the Department for Education (DfE) on January 29, 2025, these new measures aim to crack down on rogue operators offering subpar courses, which have led to substantial losses for taxpayers. The recent National Audit Office (NAO) investigation revealed alarming figures, showing fraudulent providers cost the taxpayer £2 million during the 2022-23 financial year.
Under the new proposals, course operators enrolling over 300 students will be required to register with the Office for Students (OfS). This registration is intended to guarantee adherence to rigorous quality standards before any taxpayer funding is allocated. Non-compliance could result in fines or suspension from the funding system. The DfE’s report highlighted the pressing issues—over half of the 341 franchised institutions remain unregistered, raising significant concerns about the quality of education being delivered.
The surge of franchised providers has been attributed to the financial hardships faced by universities, which have been compelled to increase student numbers amid high operating costs and stagnant domestic tuition fees. The DfE's figures reveal the number of students enrolling on franchised courses has more than doubled since 2018, skyrocketing from 50,400 to over 130,000 this academic year.
The NAO uncovered troubling aspects of these franchised courses, with 53% of the £4.1 million fraud identified by the Student Loans Company last year tied to this segment, even though these providers accounted for just 6.5% of total loan-funded students. The reports noted instances of payments to students who did not meet admission criteria and cases where providers failed to verify student attendance—critical for determining loan eligibility. Some rogue operators were also found to actively recruit students through questionable means, including employing agents or offering cash incentives.
Education Secretary Bridget Phillipson underscored the importance of these measures, stating, "We are committed to cracking down on rogue operators who misuse public money and damage the reputation of our world-class universities." Her declaration signals the government’s intention to protect students and secure taxpayer funds against systemic fraud.
The DfE's crackdown aligns with broader financial challenges currently confronting the higher education sector, with numerous universities experiencing severe budget constraints. Notably, institutions within the prestigious Russell Group have seen sharp declines in international student enrollments. For example, Newcastle University reported a staggering 26% drop in new applications from international undergraduates this year, pushing the institution to instigate voluntary severance schemes aimed at achieving £20 million savings, which accounts for roughly 5% of its payroll budget.
With budgets tightening across the board, job cuts are becoming increasingly common. Cardiff University, among others, announced plans to eliminate 400 positions, alongside significant departmental mergers and reductions in course offerings. The University and College Union has voiced intentions to potentially ballot for strike action due to these cost-cutting measures, labeling them academic vandalism.
The DfE has reiterated its commitment to creating more secure funding conditions for universities. Part of this long-term strategy includes plans for tuition fees to rise alongside inflation starting from the 2025-26 academic year, which aims to ease some of the financial pressure felt by institutions.
This concerted effort to regulate university franchising and protect public funds cannot be overstated, as it reflects the government’s broader commitment to maintaining educational standards and safeguarding student welfare. Amidst increasing scrutiny of the sector, ensuring rigorous regulatory compliance is pivotal for rebuilding the trust of students and taxpayers alike.