One of the largest annual government spending lines is the principal amount paid out to students and providers via the student loan system.

In the 2022-23 academic year this looks like being around £19.7bn in England, shared among nearly one and a half million students.

Full time undergraduate maintenance loans constitute around £9bn of this (shared among just under a million students), with full time tuition fee loans making up about £10.5bn (shared among 1.2m students). But not all students take all the loans they are eligible for.

I have a fair idea what’s going on with students who take out fee loans only – there’s about 6 per cent each year and they have an alternative source of money to cover their living costs (either Sharia-compliant finance, or there’s a lot of money in the family).

There’s likewise a few students who take out neither fee nor maintenance loans – probably for similar reasons.

But there’s around four per cent of all students who take out a maintenance loan but not a fee loan (up again this year), and no straightforward story to tell.

One explanation is that these may be students who are playing the system – accessing maintenance loans but leaving their course before fee loans become available. Back in July I used a round-about method to look at where that might be happening, and the unavoidable conclusion was that the phenomenon appeared to centre around providers that had recently increased their offer via franchise partners.

Since then we’ve seen hints of regulatory interest – the Office for Students’ Susan Lapworth has said:

Our regulatory interest has been attracted by providers that have grown student numbers on courses delivered through subcontractual relationships […] we know that increasing financial pressures may prompt institutions to look for ways to diversify income streams […] we do have an interest in making sure that SLC funding is flowing to students who are eligible and genuinely studying on their course […] so, we’re extending our regulatory work in this area.

I’ve updated the chart from July with the new year of data – in short we see the same trends as last year, but more so:

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Providers where there are more students (and more money) coming in via fee than maintenance loans are one end (bottom left on the chart) of a sector continuum – these are places where students are eligible for less maintenance (or need less maintenance). Either way, there’s a likely correlation with recruitment from better off backgrounds.

Bottom right there’s places doing some widening participation heavy lifting – more money is claimed for maintenance loans than fee loans, but more students are claiming fee loans than maintenance loans. Students at these places are more likely to come from a disadvantaged background – precisely the people the maintenance system is designed to benefit.

At the other end (top right) are providers where maintenance income (and numbers of students claiming maintenance) exceed fee income and numbers. The financial imbalance (more maintenance money claimed than fee money) is an indicator (as before) of access, and may also point to the lower fees often charged by providers delivering franchised courses. The numerical imbalance (more students claiming maintenance than fees) suggests that something else is going on too.

The regulator is actively investigating situations like this at a number of providers – it is not clear which providers are involved but this chart may allow us to guess. There are a lot of providers represented in this quadrant of concern that have expanded their franchise offer substantially in recent years, and the regulator will very much hope that governance, audit, and assurance functions have kept up.