The government is not serious about fixing the great university rip-off

New data from a Freedom of Information request reveals where students have paid back more or less of their loans

This week’s scandal

For those of us who have been warning for years about the problems in higher education the big Sunday Times scoop on “walk-in degrees” was disappointing, but not surprising.

Their story brings together multiple strands. The gist of it is:

A Sunday Times investigation has discovered that individuals with “absolutely no academic intent” are enrolling on degree courses every year to take out loans, with “no intention of paying it back”. Officials fear there is “organised recruitment” of Romanian nationals in particular.

The majority of students under scrutiny are believed to have enrolled at so-called franchised universities — which are small colleges paid to provide courses for established universities but often have low grade requirements.

The Sunday Times quote from some of the recruiters’ ads:

Another agent posting in Romanian says: “You don’t know English, but you want to enter university in the UK?”

One comment on the post, also in Romanian, reads: “Yes, that’s how it goes in the UK without English at university. I barely know 2 words and I’m passing because they take money and we take it and university is fine without English.”

Another comment reads: “I have an example in my class, he doesn’t know how to write or read in English. So it’s possible!”

Feel like you are being ripped off as a taxpayer? You are. The piece looks at how attractive maintenance loans and fee loans are for both migrants and colleges, and at the stunningly low quality of some of these institutions, including some offering “walk-in admissions.” The piece also features some pretty astonishing stats:

Leaked government figures show that the number of Romanian nationals living in the UK applying for a student loan increased from 5,000 in 2015-16 to 84,000 in 2023-24, suggesting 15 per cent of the Romanian population in Britain was paid a student loan last year.

Just the latest scandal

The story basically combines two overlapping things which have been a worry for a while: low quality higher education, and abuse of student migration, which I have written about before.

In 2023 Baroness Barran commissioned the DFE to review “franchised” provision, as an area where there are particular problems. This is where a university with degree awarding powers will accredit (for a fee) degrees that are studied at another institution which doesn’t have degree awarding powers.

Some of what is entering the public domain now reflects that review. Last year the NAO published a report on franchising. While there is a legitimate argument for this sort of thing as a way of getting a new university going, they also offer the potential for loads of abuse, with the provider of the degrees taking a cut, but looking the other way as the host institution lowers standards and recruits aggressively.

The Sunday Times story is about the interaction of this low quality HE with a niche migration route.

Many people would be surprised to learn that in the first six months of this government - long after Brexit - that over 180,000 people were given settled or pre-settled status under the EU settlement scheme.

These were people who applied long after the June 2021 deadline. Over the course of the whole scheme Romanians have been far and away the largest users of the route, and that has become more pronounced recently - Romanians accounted for 42,000 186,000 approvals during the last 6 months of 2024. Indeed, the dominance of the Romanians on this route may indeed partly reflect the HE scam the Sunday Times is reporting on. But either way, it is weird that a route that was really supposed to be over after 2021 has carried rumbling along at a fairly constant level ever since:

How and why is this migration route even still going? There is a whole story to be told about this. Applications have been allowed long after the deadline, including lots of repeat applications¹. People can come if they say they are in a relationship with someone who gains settled status, so 200,000 people from India, Pakistan and Bangladesh have gained settlement under the settlement route for EU citizens, along with 65,000 from Ghana and Nigeria.

Karl Williams at the CPS has been waging a lonely campaign to get ministers to focus on this, but so far it continues to trundle along.

The context

In the autumn we warned against increasing fees and tipping yet more taxpayers’ money into an un-reformed higher education system.

Ministers ignored us, and went ahead anyway. They broke their promise on fees in order to compensate universities for their own broken promise on national insurance.

Some of us have warned for years that student migration is being abused. Bridget Phillipson condemned us. She claimed international students had been:

“exploited for cheap headlines… for too long international students have been treated as political footballs, not valued guests…

It seems she has now discovered that the problems we were complaining about are real after all. Unfortunately her solutions are not.

Scratching the surface

In response to the very clear abuse of taxpayers that’s going on, the government’s response is pretty weak stuff.

The DFE is consulting on requiring franchise providers to be regulated by OFS. But many of the biggest are already regulated by OFS, so how will this change things for them?

The Public Accounts Committee recommended setting rules on the proportion of tuition fees that lead providers could retain. But the government rejected that in September.

In October DFE said they were “developing options for legislative change” to tweak the role of the OFS over value for money. The SoS re-announced this the other day - but nothing’s changed. I wonder when we will ever see this legislation, and what ministers will actually do?

Phillipson says the public sector fraud authority will be brought in. But how is this different to the Internal Audit Agency investigation already mentioned in last year’s NAO report? It sounds like a re-announcement.

Measures to get a grip seem to be being held back by Treasury concerns that if they get involved the ONS will reclassify universities to the public sector and bring their debts on balance sheet - just as they did with the railways.

The government isn’t doing any of the things that would make a difference. Even the basics.

Amazingly the Student Loans Company appears to be accepting just a certificate of application for settled status to qualify for a loan². That needs reviewing.

Given the grotesque abuse of taxpayers that’s now apparent, will the government commit to review the availability of student loans for non-UK nationals?

Nope.

Will the government review ongoing applications for EU settled status?

Nope.

Ministers are doing very little. And the truth is, the sort of fraud in the Sunday Times story is the tip of the iceberg. Actually, the biggest losses for taxpayers come not from outright criminal activity, but institutions operating within the law, in ways that rip off taxpayers.

Tackling the data desert

One of the problems in the debate about higher education is the unbelievably limited amount of data in the public domain about value for money.

I have written about the very good work done by the IFS, using the longitudinal education outcomes (LEO) dataset, showing the likely returns on different types of degrees.

They looked from the student perspective, the taxpayer perspective and a combined perspective. They found that:

"total returns [on going to university] will be negative for around 30% of both men and women."

It’s great work. But it’s now old - it covers people who were students in the mid noughties.

We can see that the graduate earnings premium has declined steadily since then as numbers have grown. The median 21-30 year old graduate earned 35% more than the median non-grad in 2007, but only 21% more in 2023, despite having tens of thousands to pay back.

This means the distribution of earnings between grads and non-grads is increasingly overlapping. The large premium graduates used to earn over the minimum wage has collapsed even more dramatically.

This is not too surprising. Graduate earnings strongly reflect prior attainment. Debates about the exact balance of signalling versus human capital formation in different subjects will never be resolved, and varies a lot by subject³, but no-one serious denies that a lot of the “graduate premium” reflects students’ prior characteristics, rather than the activity of the university:

Given the highest performers at A-level were already mainly going to university, expansion has inevitably been concentrated among people with lower prior qualifications.

For example, if we look at the universities which had higher graduate earnings in 2021/22 (earning an average of £30,000 or more five years after graduation), their graduates accounted for about half the total in 2015/16. But 90% of the growth in graduate numbers has come in institutions where average earnings are below that:

To really get to the bottom of the value being added for the marginal student we would need more of the kind of work the IFS did.

Fortunately, the last government commissioned an updated paper from the IFS on this.

Unfortunately, although I have requested that document via FOI, ministers are currently blocking its release.

And if I wanted to access the LEO dataset to update it or do more analysis myself I would basically have to go and get a job at the IFS⁴. There are also important limits to this data⁵, and even more so for the published version.

Given the lack of good data in the public domain I have submitted a number of PQs and FOI requests.

A while back I got some data from a Parliamentary Question, showing that nearly a million graduates have never earned enough to repay any of their student loans. There were seven institutions where a third of graduates / borrowers have never made any repayment.

This is quite an extreme measure, as you would hope most graduates would earn enough to repay something at some point. Still, you can get that data below, with shares calculated, and a filter for full universities.

241103 He Instits

87.6KB ∙ XLSX file

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Download

More recently I used FOI to obtain some more data from the Student Loan Company, which shows:

• How much has been lent to students at each different higher education institution.

• How much is still owed to pay back by students at each institution.

• How much has been paid back by those who have fully paid back.

• The numbers of graduates who have borrowed, how many still owe, and how many have fully paid back.

That data is here if you want to take a look:

250324 Student Loan Data From Foi

253KB ∙ XLSX file

Download

Download

This data is far from perfect. It is mushing together people who have taken out loans at different times and on different terms. It is lumping together both undergraduates and postgraduates. In different nations. There are no controls for background.

Some institutions have been around for longer than others and so their graduates have had more time to repay - so we need to bear that in mind as we analyse it.

Still, in the absence of being able to access better, more recent data (as we should be able to) it still shows us some interesting things about the nature of Higher Education and taxpayer funding for it.

Payback time?

While the published data from LEO lets us see how much recent graduates from larger institutions earned in different years, it doesn’t let us see how much they borrowed or paid back.

And while the published cut of LEO earnings data covers about 300 institutions in the most recent year, the data here lets us look much wider, and contains information on about 1,250 providers.

The FOI data also gives a sense of the magnitude of the loans outstanding for graduates of each institution - over £200bn worth in total. There are just under 100 institutions where their graduates have cumulatively borrowed a billion pounds. HE is big money.

Here’s one way of looking at the FOI data. The chart below compares the share of borrowers (over all time) who have fully paid back their loan (the Y axis) versus the share who have not paid back and are not expected to do so. Broadly speaking, the older the average graduate is, the more chance they have had to pay back or reach the point where they no longer have to pay. Broadly speaking, taxpayers and graduates will likely end up footing greater losses towards the bottom right, and smaller towards the top left.

Problems in the long tail?

But the chart above is still only looking at 200 ish larger institutions.

And we know from the LEO data that smaller institutions generally see lower earnings among graduates.

One of the interesting things in the FOI data is the tier of institutions which are not traditional universities (e.g. they’re outside the membership of Universities UK) but are still benefitting from large amounts of loan financing from taxpayers.

Looking at the FOI data on smaller institutions, there are some surprising institutions that have received taxpayer funding for loans, including: The National Centre for Circus Arts (£582,000 lent, 0% repaid); the Scottish School of Herbal Medicine; The College of Integrated Chinese Medicine, and the Centre for Homeopathic Education (£2.6 million lent, only 5% repaid - a homeopathic amount in fairness).

These are niche examples. But on a bigger scale there are a lot of middle-sized ‘business colleges’ – mainly in London - with quite a lot of loans and not much paid back yet.

Many have highly international recruitment (some offer a ride from the airport) and several have clearly chosen their names to sound like a more prestigious institution. They are generally delivering franchised degrees of the kind discussed in the Sunday Times story.

For example, Regents College and City College are not the same as Regents University and City University. Empire College is not Imperial College. The LST is not the LSE, and UCK is not UCL. The London School of Commerce and IT is completely different to the London School of Commerce. Keep up.⁶

Most are in fact limited companies. On average the largest 50 universities in the FOI data had seen about 19% of their loan funds repaid, and of the top 10% it was more like 30%. In contrast, several of these business colleges see much lower repayment rates. The following is an arbitrary selection:

• Apex College Ltd: £26.5m lent, 1% repaid

• Applied Business Academy Ltd: £60.5m lent, 0% repaid (now closed)

• Brit College Ltd: £70.5m lent, 2% repaid (OFS investigated)

• Empire College London Ltd: £27.5m lent, 1% repaid

• Fairfield School of Business Ltd: £79.2m lent, 2% repaid (OFS referred to trading standards)

• Global Banking School Ltd: £108.3m lent, 1% repaid

• London Churchill College Ltd: £109.1m lent, 2% repaid

• London College of Business Studies Ltd: £23.1m lent, 2% repaid (OFS conditions imposed)

• London School of Business and Finance Ltd⁷ (LSBF): £127m lent, 4% repaid

• London School of Commerce and IT Ltd: £25m lent, 1% repaid

• London School of Science and Technology Ltd (LST): £230.8m lent, 3% repaid (No longer eligible for UK student loans)

• Nelson College London Ltd: £236.8m lent, 1% repaid

• Regent College London Ltd: £243m lent, 2% repaid (OFS investigated)

• The City College: £36.7m lent, 2% repaid

• The London College, UCK Ltd: £184.9m lent, 3% repaid

• UK College of Business and Computing Ltd: £126.7m lent, 3% repaid

Only two of these 16 institutions have overall average earnings info shown in the published LEO data⁸. Only two have any TEF rating (one Bronze, one Silver).

And at the level of the individual course things are no better. To try and aid decision-making the government created the website “Discover Uni”. Of the courses that are listed, many lack any earnings data. In the institutions above, their websites list around 128 courses, of which 33 appear on Discover Uni. There’s earnings data for 23 of them, of which only one is listed as having above average earnings for the relevant category. That’s particularly striking, given these institutions are mainly in London, where earnings are higher.

There are also questions about how meaningful the little bit of data that is published is anyway. Where data exists in Discover Uni, the data for different courses (of different lengths) at that institution are rolled together within categories, and then compared against that category of courses nationally.

For example, London Churchill College offers a HND in Entrepreneurship and Small Business Management and a HND in Hospitality Management. On the website earnings for these different courses are rolled together - graduates earned £11,500 on average 5 years after graduation. The website compares this to all business and management graduates, who earned £21,500 at the same point. Is this a fair comparison? Are either of these courses good value for money? You tell me. It will certainly be difficult for students to make judgements, even if they do find this data.

Now, some of these places may turn out to be brilliant academic powerhouses.

My real point is simply that we don’t currently have the data in the public domain to allow a proper public debate about the value for money of HE spending.

The sums involved here are not trivial: there are over 200 institutions listed in the FOI data where 5% or less of of the funds loaned have been paid back to far, and those institutions account for £7 billion of lending. Is that spending a good investment? We don’t know.

The data from my FOI request lets us see more than before, and deepens concerns. But what we really need is much better data - and ultimately a system where ministers have a stronger grip of taxpayers’ money.

Conclusions

The abuses described in the Sunday Times are really serious, and in some cases amount to fraud or at least of breach of the rules.

But the much bigger problem for taxpayers is activity that is within the rules, but is a waste of money.

In other fields like medicine there are rigorous systems to ensure value for money. In health, NICE determines whether drugs are worth it. The committee on screening does something similar. And behind these institutions is a well-developed framework for thinking about such questions, and concepts like “quality adjusted life years” (QALYs).

In Higher Education we don’t have that. Such earnings data as is published doesn’t cover quite a lot of institutions. We don’t have accessible data on how much of the money people on different courses are borrowing and repaying, never mind any more sophisticated analysis of value added.

Some people still want to argue that all is for the best, in the best of all possible worlds, and that student choice is a guarantee that funding will be spent well.

In reality, we have a quasi-market in which 16- and 17-year olds are choosing, mainly based on what they enjoy at school. They are not mainly thinking about their earnings at age 50, or the skills gaps facing the economy. Even if they were, the information gaps they face are large. While student choice is important, it alone cannot be regarded as a guarantee that hundreds of billions of pounds will all be well spent.

The pressures on public spending are huge, and there are many desirable things, even within HE, we would like to be able to fund. And it was already clear - even from old data which pre-dates recent expansion - that there is a significant amount of HE which is not good value for students or taxpayers. At some point that needs to be addressed.

The truth is, the Sunday Times story is really the tip of the iceberg.

The government talk about reform, but they are barely scratching the surface.

1. A quarter of which have come from Romania.

2. A point spotted by Aylmer.

3. Some subjects see little variation in earnings as long as you are qualified enough to get in: (medicine, nursing). Some see low earnings for any level of prior attainment (arts, media studies). Some vary massively by prior attainment, e.g. Computing, Economics, Law, Business.

4. For example, the House of Commons Library – regarded as a pretty gold standard source – is able to access many datasources and economic models, but is not able to access LEO, such are the restrictions.

5. Amongst other things, the successful matching rate to earnings is lower for students with higher prior attainment but has grown faster - it all needs handling with care.

6. Oh, and “The London College of Business Studies” is not the same as “The London College” or the “London College of Business Sciences” or the “London College of International Business Studies.”

7. As far as I can see, you can no longer get a student loan to go to LSBF. In May 2014, The Guardian reported LSBF lecturer's claims that the institution "is chaotically organised, lacks basic teaching resources and maintains disruptive students on its books to keep the income they generate flowing in".

8. LST and UCK, where lower quartile earnings in 21/22 were about 35% and 40% below the average for other institutions.