Franchised higher education courses face tighter rules to curb ‘rogue operators’

Providers delivering franchised higher education courses in England face tighter controls in a bid to crack down on “rogue operators who misuse public money”, the Government has announced.

Franchised providers – external organisations that operate in partnership with registered universities to deliver courses on their behalf – with at least 300 students would be required to register with the Office for Students (OfS) to access student loan funding under the plans.

It is hoped the proposals by the Department for Education (DfE) – which are out for consultation – will ensure courses meet rigorous quality standards.

The Public Accounts Committee (PAC) warned last year that a lack of Government oversight of franchised higher education providers had left the student loan system open to fraud.

A National Audit Office (NAO) investigation found that 53% of the £4.1 million fraud detected by the Student Loans Company by value in 2022/23 was at franchised higher education providers in England.

More than half of 341 franchised institutions are unregistered with the OfS, England’s higher education regulator, meaning they are not directly regulated, the DfE said.

In some cases, students are offered poor-quality courses that fail to justify their cost, it added.

In September, the OfS warned there were “risks” to students, taxpayers and the reputation of universities if there was no proper oversight of franchised higher education provision.

Under the plans, if the OfS finds that a provider is not meeting the standards required of registered organisations, it will be publicly held to account and could face fines and the suspension of its registration, the DfE said.

Education Secretary Bridget Phillipson said: “We are committed to cracking down on rogue operators who misuse public money and damage the reputation of our world-class universities.

“Franchising can be a valuable tool to widen access to higher education, and these proposals will ensure students can trust the quality of their courses, no matter where or how they choose to study.

“The credibility of our universities is at stake, but these proposals seek to protect students and safeguard taxpayers’ money as part of our work to drive growth through our Plan for Change.”

In a written ministerial statement, Baroness Jacqui Smith, universities, skills and apprenticeship minister, said: “Whilst there are many good examples of franchised provision being used to expand access and participation and deliver high-quality provision, franchised higher education is one area where we have seen too many examples of abuse of public money in recent years and some concerning indicators of poor quality.

“Students make a significant investment in higher education and they deserve to have confidence that in return they will receive excellent teaching, strong support and value for money.

“Taxpayers too deserve to know that the public money invested in student loans to help students access higher education is properly protected from fraud and misuse.”

New regulations could come into effect as soon as spring next year, depending on the outcome of the consultation, which is open until April 4.

The DfE aims to publish its response to the consultation in the summer.

A Universities UK spokesperson said: “Universities recognise the importance of maintaining the UK’s strong reputation for quality in higher education and franchised partnerships are no exception.

“We look forward to working closely with both Government and the Office for Students as part of this consultation to make sure we achieve that objective.”