Jim is an Associate Editor at Wonkhe

Back in August 2019, GSM London – the private higher education provider formerly known as the Greenwich School of Management – went into administration.

This was a major collapse impacting thousands of students – GSM had received £152m of public money in the six years to 2017-2018, and 3,500 students were enrolled when it went under.

But until now we’ve not heard anything official from anyone involved in the aftermath of the collapse. The Department for Education (DfE) hasn’t reported on what happened, and nor has the Office for Students (OfS). The other members of a taskforce formed at the time (the University of Plymouth, the administrators, the Student Loans Company and UCAS) have all been pretty tight-lipped too.

DfE may have wanted to avoid any of the blame getting near ministers, and OfS might well say that while it helped out (and apparently refused GSM’s registration, arguably helping in part to trigger the collapse) its duties were with registered providers, not ones that never got on the register.

GSM might not have been on the OfS list, but it was a part of our national complaints scheme – so now the Office of the Independent Adjudicator (OIAHE) has published probably the closest we’ll get to a proper review of what happened. If you want the full detail, the report itself is probably worth a long read. Here I’ve tried to do something else.

Arguably the most important thing you can do when reviewing a crisis is ask whether it could happen again. And I have bad news on that front for students who, for some reason, we continue to fail by offering inadequate protection in comparison to the risks they take.

Because while some of this is about the rare and complete collapse of a large provider that never became registered with OfS, a lot of it is also about the sort of stuff that could happen, and regularly does happen, where you may work or study too.

Memory lane

First, though, a little history. Teaching at GSM’s campuses in Greenwich and Greenford ceased in September 2019 because it had been unable to “recruit and retain sufficient numbers of students to generate enough revenue to be sustainable”.

Numbers never used to be GSM’s problem. It had been a major expander in the early part of the decade when student number controls came off and ministers were excited about “challenger institutions”. But parts of that expansion quickly started to look like a problem. In 2015 the Quality Assurance Agency upheld a complaint launched via its “concerns” scheme about the “promotion and operation” of a business management course. And a Panorama investigation in 2017 included footage of conversations with a GSM recruiter paid £600 for each student he brought in (with the offer of a local essay mill to do the work to boot).

This thread on The Student Room painted an interesting picture, and glance at some of its courses on unistats before the collapse suggested a clash between its commitment to widen participation and some of its outcomes – the sort of clash that OfS was imposing regulatory conditions (or refusals) over throughout the year in its initial provider registration period, and that we’ve been debating on the site this week.

Thomas Hale over at the Financial Times covered some of the financial details – it had had capital injections of £22m since the end of 2016, and DfE had green lit GSM’s access to the student loan book as late as November 2018, even though there were signs then that it was in trouble with recruitment. Ministers approved a turnaround plan with GSM’s owner, the private equity firm Sovereign Capital, that included £26 million of debt being waived.

But turnaround was tough. Having still failed to recruit sufficient students its board resolved in the spring of 2019 to put it up for sale. Eventually GSM’s statement in August said that a sale “was not possible to achieve” and so it became necessary “to seek the protection afforded by a formal insolvency procedure”.

What was subsequently revealed was that GSM had been provisionally refused registration by OfS in a letter sent on 11th July. That had been issued for two reasons. In the OfS “D” conditions OfS argued that the financial position of GSM was contingent on the provider finding a buyer for the business and that buyer making significant investment, and because that hadn’t happened, OfS concluded that GSM was neither financially viable nor sustainable.

This “chicken and egg” problem may well have been the interrelationship between not getting that provisional refusal until then and trying to find a buyer. Registration had opened in April 2018 but the process was beset by delays, and any sensible buyer will have been wanting to see an OfS logo in its due diligence. In the run up to September 2019 providers were therefore told that they would be able to continue to provide access to the loan book for existing students, but not new students.

But the other reason for refusal was our old friend, the B3 bear. Using its “B3” student outcomes conditions, OfS said that continuation wasn’t good enough – a controversial process which ended up the subject of the well documented court case involving Bloomsbury. We may therefore never know whether OfS “caused” the GSM collapse, but its actions were in the mix.

(A note here in passing. At one point OfS also refused the registration of Barking and Dagenham College on the basis of its B3 outcomes. But that refusal is now mysteriously missing from the site. OfS will only say that “we can’t comment on individual providers”.)

I’m only human

All of this naturally had human consequences. Real students were on degree courses validated by the University of Plymouth, and a handful of postgraduate PhD students were validated by other partners.

Crucially, its whole thing was WP – the majority of its students lived locally, many were mature students with caring responsibilities, and plenty were working at the same time as studying. And the flexibility in its delivery model treasured by ministers (lower fees than the £9k max, two-year accelerated degrees and multiple start dates) meant that its collapse didn’t fall neatly at the start or end of the “academic year” for many students, causing real chaos.

The case studies are heartbreaking. One student was admitted to Coventry University London, but the level 5 credits they had achieved were not considered to be equivalent to the level 5 modules on the new course, so the student was required to study further credits at a total cost of £15,250. Another was told to relocate to Plymouth or enrol in a provider in London and pay an extra £1,521, but they could afford to do neither.

Some students were even reported to the Student Loans Company (SLC) for non-attendance, upon which the SLC started clawing back – but in some cases OIA found that students were not able to attend teaching because it was not taking place, and in others the electronic card entry system that recorded attendance had malfunctioned.

The individual case studies are upsetting enough, but it’s OIA’s six general observations where things get damning, particularly if you think about them in the context of the future and in the context of providers now on the OfS register.

1. Warnings

OIA picks up that students were unsurprisingly shocked and distressed by the situation:

Some students felt that they ought to have been given more warning that their course could close, or that they should not have been allowed to enrol. Several students have complained that they would not have started their studies at all, had they known that they would not be able to complete a full undergraduate degree.

Should we warn students about risk? We’ve had this debate about whether you cause a run on the bank by being honest about provider financial precarity on the site before, and it’s one we should continue to have.

A whole number of providers could be teetering on the edge right now and students would never know. And we can think of several course closures announced this year that students were given no warning of in the student protection plan “risk assessment”. Why?

2. Support

Then there’s the way in which OIA had to step in to support students through the complaints process:

We set up a separate complaint form for GSM students which asked specific questions about how the closure had affected the student, and we also provided answers to some FAQs on our website. All students at GSM were told about their opportunity to complain to the OIA in correspondence from GSM. We recognised that GSM would no longer have administrative support for complaints and appeals, so we decided to accept complaints without GSM Completion of Procedures Letters. In some cases we redirected complaints to the University of Plymouth.

In an ideal world, GSM students would have had access to a functioning students’ union advice centre capable of offering independent support and advocacy. But again as we’ve pointed out on the site before, OfS and DfE have been consistently squeamish about guaranteeing that kind of support – and it’s students in the most precarious positions in the riskiest institutions that need that support the most, but usually don’t have it.

3. I owe you

There’s the creditor issue:

[The administrators agreed] that where we made a recommendation for financial compensation, they would consider the amount as the total owing to the student as an unsecured creditor (though unsecured creditors are not likely to receive the full amount owed to them).

OfS would say that in some rare cases it has required providers to set aside ringfenced funding to protect students who would be at the back of the unsecured creditor queue, but it’s not at all clear whether that would work in the way OfS claims, or how many providers that is in place for.

The bottom line for this already disadvantaged set of students is as follows:

We have welcomed the very positive engagement of the Joint Administrators in this instance. However, the reality is that the actual amount which students will receive is likely to be considerably less than the sum we consider is reasonable.

Don’t we therefore need some kind of collective fund?

4. Options

The University of Plymouth had a Student Protection Plan, and it stated that students could transfer to them as the validating provider, but it’s perhaps not surprising to learn that predominantly WP students combining studying with earning in London were not prepared to move to Plymouth. So the first question is – why are solutions like that in SPPs ever approved by OfS when they’re so obviously preposterous?

In this case, plan B kicked in:

The University of Plymouth mapped GSM courses, where possible, against courses offered by other providers. As GSM was located in London, more local options were available than might otherwise have been… But students were not given detailed information about why particular courses were considered to be a good match… some students complained that the options they were presented with offered a more generic degree title, and did not deliver the specialist learning which they had expected from GSM.

I’ve read a hell of a lot of Student Protection Plans, and I’ve rarely seen one that properly addresses with any clarity or precision the geography or practical suitability of alternative courses. For example:

The complaints we received refer to students not being able to meet additional travel costs or being unable to make additional travel time work around childcare or employment.

Why shouldn’t students expect a regime that guarantees they would face no additional costs if their provider collapses? But again, barely an SPP covers the issue. The mess above on alternatives is a hole that is very obviously still there, right across the sector, for course and campus closures as much as for institutional closures.

5. Options pressure

Most heart wrenching is the section on students feeling under pressure to make decisions about what to do next very quickly:

For some students, the pressure to continue their studies quickly was a financial decision. They were concerned that if they did not resume their studies elsewhere immediately, they would not be able to access their maintenance loans. In some cases, there were delays in receiving the loan payment after the student had transferred. Several students told us that they were in serious and immediate financial need.

And what happened? Some moved, and over 2,600 of them transferred to a different provider to continue their studies. But:

Others have decided to stop studying, having achieved a CertHE or DipHE award. Some may use their previous studies as accredited prior learning in future. But there may be some who do not return to higher education at all and so may never achieve their intended level of qualification.

Why were we unable to provide a financial safety net to these students? Don’t we need to know how they all did? Why are we getting these numbers from OIA? And what happened to all the others on courses in providers that never made it onto the register?

6. Records

Shamefully, although the records of students’ progression and academic achievement were transferred to the University of Plymouth, not every record about a student was transferred and some records were incomplete.

Are partnership offices confident right now that every validated provider has the sort of records to avoid this happening in the future? Really?

In the plan

In a separate briefing note, OIA sets out some learning from the breadth of complaints it has seen that have arisen from the closure of courses, campuses or whole providers, and much is the usual sensible advice – things like having early discussions with student representative bodies, lining up support services and being proactive about identifying and supporting students who may need additional help. Why aren’t these all core features of Student Protection Plans?

It notes that some students will have mental health difficulties, and others will have communication difficulties. There will be implications for international students’ visas and complexities surrounding accommodation contract commitments. Even where just a single course closes, it says that providers should explain to students what is happening early enough for them to think about what it means for them and to make informed decisions about what they should do – because it’s often seen providers sit on the plans. Why aren’t there standards like this in signed off Student Protection Plans?

It notes that “teach out” is often promised, but arrangements are generally time limited – so students who have to re-take a year, or who have to step off a course for a year for personal or health reasons can be disadvantaged if provision is not made for them, a particular issue for disabled students who may need to take time away from their studies. And it also says that planning for course closure or significant curriculum changes needs to include arrangements for students who fall behind, students on niche courses and postgraduates in specialist areas. Why can’t I see this stuff in most Student Protection Plans?

Surprise surprise, it has found that during “teach out”, the closure of a course “may mean that the number of teaching staff begins to fall as staff leave and are not replaced”, and “a lack of investment in materials or resources may also have an impact on the quality of the course”. Yet in so many approved SPPs all that’s there is “ah, don’t worry, if we shut your course we’ll teach out” – as if it was that simple.

I could go on. In some ways the most scandalous thing about the whole story is that it happened at all after the Panorama episode in 2017, and the idea that the students who dropped out at that point didn’t get their debt wiped by DfE as recompense ought to shame those involved.

But as I said earlier – this isn’t just about small, private providers. There are important policy conclusions for the wider sector that I think we ought to draw from the material that OIA gives us here.

Lessons to learn

The first is that undertaking a higher education course is risky. “Shaking up” the higher education “market” makes it riskier still – because we are encouraging smaller providers with “non standard” courses and shorter track records onto the playing field, while encouraging major churn and dramatic recruitment ups and downs even in established providers. The people taking these risks are also often least able to withstand failure. And Covid makes it all ten times worse. We owe people that are taking these risks real protection. Now.

GSM wasn’t on the OfS register, but it’s vividly clear that even if it had been, the current standard of Student Protection Plans – the policy solution to the risk and protection problem – are nowhere near good enough. Course and campus closure happens both in providers like GSM and in the old and established part of the sector too. You’ll probably remember that OfS’ own review of its initial registration process said that a large number of SPPs were poor, but approved plans that were “significantly” below the standard it would expect anyway on the promise that those providers were told to resubmit improved plans following the publication of revised guidance by OfS. But that revised guidance never came, and most of those plans were never revised.

A consultation was repeatedly delayed last year, paused for the General Election, and was indefinitely suspended – ironically because of a pandemic that has made these risks look much more likely. Even a mini review promising something called “Market Exit Plans” is missing in action – a consultation closed in September, but no discussion materialised at the OfS September board. In any event, much much tougher scrutiny and monitoring of the approval and execution of SPPs should be introduced, and OfS should be outlining the lessons learned from OIA complaints in that toughening. We need a review of Student Protection Plans, and if they survive they need to actually protect.

But the other thing that’s clear is that a plan to be executed by a provider on its knees may never be worth the paper it’s not written on if it collapses. OIA concludes:

But we continue to believe that there is a need for some kind of insurance scheme that could help protect students, give them confidence in the system and pay out in the worst-case scenario. We would like to see more discussion and policy thought about who should provide this vital safety net and how it should be paid for.

Scandalously, we don’t know how many courses or campuses have closed in recent years. We don’t even know how many providers have quietly gone that never made it onto the OfS list. And we certainly don’t know how many courses (and their “material components”) have not been delivered in the way that students were promised. We need to know. Ten years after the basics of the current system were introduced and deliberate hyper-marketisation was encouraged, we need a proper look at what went well, and what went wrong.

We also may not have yet seen what is often referred to as “disorderly market exit”, ie the sudden closure of a whole provider – and maybe a way will be found to avert such a crisis. But what do we think a charter on “portfolio reviews” is for if it’s not opaque language describing a truck full of course closures?

What we do know is that taking what you’re given, believing there’s no alternative and feeling trapped is something that thousands of students are feeling right now. So if OIA is right:

It seems likely that we will see more closure events, in one form or another, in the next few years”

… isn’t it time for policy makers to step up the protection?


2 responses to “We need a collective insurance scheme to protect students

  1. I don’t believe any collective or shared fund is feasible in this day and age – we no longer have the constrained reputational range that made such things possible. It should be practicable for OfS to require all providers to hold suitable business insurance. Better financial compensation for the affected students is therefore possible, but even if the insurance is in place to support teach-out too, who will take on the role of teaching out the programmes? If we want to guarantee to students that they can finish the course they started, then this is the real who-will-bell-the-cat issue.

  2. Insurance as a solution?

    The English HE industry might be able to buy a collective policy a la the travel industry’s ABTA, but that would involve Us who do not think they will ever go bust paying in and hence an almighty squabble over which Us pay in at what rate if not all are paying in at a standardised rate based on student numbers rather than financial insolvency risk.

    Or the industry could self-insure, but that would involve contributing to a kitty and hence the same conundrum as to who contributes how much.

    As for each U buying its own insurance, the underwriters would want to assess the insolvency risk and that would present the same sort of issues as for the rating agencies awarding a credit rating to a U, as for the banks or bond placement agencies deciding whether to lend to a U, and as for USS in trying to persuade the Pensions Regulator of the collective supposed ‘strength’ of the employers’ covenant as the cumulative solvency of the pre-92s.

    And ring-fencing the U’s money to finance a SPP is difficult under insolvency law short of a special insolvency regime being legislated for HE as was done a few years back for FE.

    All as discussed at an OxCHEPS Occasional Paper a year or more back.

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