More than £1bn in tuition fees over the last three years has gone to unregistered providers

Over the past three years more than £1bn in tuition fee loans has been paid on behalf of students taught at unregistered providers of higher education in England.

In the 2022-23 academic year alone (the most recent for which full data is available) nearly £450m in tuition fee loans was paid with respect to students taught at providers who are not registered with the Office for Students.

These funding allocations relate to nearly 50,000 students studying at unregistered franchise partner providers – a further 35,000 (£306m) relates to franchise arrangements where the teaching partner is registered with OfS. This new information supplied by the Student Loans Company (SLC) comes from a ministerial response to a written question from Baroness Hoey.

The volume of students involved in the unregistered part of the sector rose to around 59,000 in 2023-24, with the total number of students studying via franchise provision passing 100,000 for the first time in that year (data on payments made in 2023-24 is not directly comparable with previous years as some accounts are still active so the final total is not yet know). This provides further evidence of a boom in franchise provision – something which may also have an impact on the number of undergraduate students applying via UCAS to higher education.

It is important to note that not all of the funds will have been passed on to franchise providers – lead partners take a cut of this income ranging from 5 to 30 per cent depending on the terms of each agreement.

The Department for Education is currently consulting on proposals that would require larger teaching partners (over 250 students) to register with the regulator, as concerns have risen about the quality of teaching in such settings and the level of potential fraud around franchise arrangements. Earlier this month the Secretary of State took action regarding provision at Oxford Business College, a provider that was not registered with OfS yet taught students on courses leading to qualifications from a number of registered providers.

As things stand there is no requirement for providers to register with OfS to participate in such programmes – many (particularly further education colleges) choose to as a staging post to eventually achieving degree awarding powers and/or university status of their own. The regulator has no direct powers to intervene in non-registered providers, relying instead on oversight provided by lead providers. There have been many recent reports of OfS, the Department for Education, and SLC working together to address fraudulent activity relating to franchise partnership provision.