Counter-fraud experts have been called in to investigate allegations that thousands of people enrolling in university degrees are stealing hundreds of millions of pounds from Britain’s loan system.
Education secretary Bridget Phillipson urged the Public Sector Fraud Authority to probe claims people were enrolling on university courses to take out loans with “no intention of paying them back”.
Up to 270 fraudulent claims worth up to £3.7m were identified by the Student Loans Company (SLC) last year, with £2.8m saved and £843,000 lost, The Sunday Times reported.
According to the masthead, most of the students under scrutiny are thought to be at “franchised” universities, which are colleges paid to provide courses for established universities.
There is concern of potential “organised recruitment” of Romanian nationals in particular to enrol on courses, it added, with many using TikTok to give advice on how to access student loans.
In some cases, franchised colleges accept screenshots of language-learning app Duolingo tests as proof of English proficiency for course enrolment.
The UK’s student loan debt has soared to £236bn and is expected to reach £500bn by the 2040s, the newspaper reported.
Students and overseas students can take out government-subsidised loans to help fund day-to-day living costs and tuition fees.
The tuition fee is paid directly to the university but the maintenance loan is paid directly to a student's bank account.
Graduates are expected to repay their loan after they begin earning a certain amount, which currently ranges from £24,990 to £31,395.
Ms Phillipson said she had asked the Public Sector Fraud Authority to “co-ordinate immediate action across the system to halt this growing threat”.
“Today’s revelations demand that we must go further and faster to protect the public purse,” Ms Phillipson said in the newspaper. “I will not tolerate a penny of taxpayers’ money being misused.”
A Department for Education spokesperson said: “We will stop at nothing to protect public money; any misuse of student loans is an insult to hard-working students striving for better opportunities.
“Our plan for change will restore trust in our universities. We have already taken clear action to crack down on rogue franchise operators to tackle fraud and we’ll go further. We will overhaul regulation so the Office for Students (OfS) better-protects taxpayers’ money. In the meantime, we have asked the OfS to clamp down on franchising.
“The Education Secretary has asked the Public Sector Fraud Authority to help co-ordinate the cross-government response to these extremely concerning allegations and support the investigations already under way.
“Where misuse or fraud is found we have powers to claw back payments – and we won’t hesitate to use them. We will bring in tough new laws to ensure the OfS can quickly stop bad actors gaming the system once and for all.”
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