Financial support for students at alternative higher education providers - Public Accounts Contents

2  Securing value from the sector

13. When the government introduced changes to allow expansion of the alternative provider sector, one of its key policy objectives was to improve student choice by supporting a more diverse sector, with more opportunities for part-time or accelerated courses, distance learning and higher-level vocational study. This would widen participation in higher education, particularly amongst groups who have not traditionally had such opportunities. Although this high-level aim was clear, the Department did not develop specific measures that would allow it to monitor the extent to which it was achieving the policy objectives.[27] In particular, the Department was not able to tell us what impact it expects from the expansion of alternative providers in terms of outcomes for their students and the longer-term potential benefits of the sector for the wider UK economy.[28]

14. Furthermore, the Department is not collecting information that would help it determine whether or not the expansion of the sector is working. Some providers may be achieving more towards the government's aim of increasing diversity and participation, and the NAO has provided evidence that some providers may be performing well in some respects. For example, the NAO report shows that some providers have dropout rates that are lower than those of many publicly-funded providers.[29] However, the Department lacks sufficient information on what the better-performing alternative providers are doing differently and whether older students or those on low incomes are gaining qualifications.[30]

15. The Student Loans Company paid out a total of £1.271 billion in financial support for students at alternative providers in the four years from 2010/11 to 2013/14.[31] We questioned the Department and the Student Loans Company over how much of this money was spent in ways not originally intended or expected. Although the Department had identified some elements of the cost it was not able to provide us with an overall figure. It did not think it would have a full figure until a full cohort of students completes its studies, in two to three years' time.[32]

16. In introducing its reforms, the government intended to widen access for students in England who previously had fewer opportunities to enter higher education. However, approximately 40% of publicly-funded students at alternative providers come from the rest of the EU, compared with 6% of students in the rest of the higher education sector.[33] While some EU students will be UK residents, others will return to EU member states after their studies and it is more difficult for the Student Loans Company to recover loans from EU students resident overseas than from students resident in the UK.[34] The Student Loans Company told us that, across the higher education sector, there are 22,000 EU borrowers living overseas with a total debt of £145 million. A third of these borrowers are in arrears, owing a total of £19 million. We are concerned that public money may be lost if large numbers of EU students at alternative providers fail to repay their loans.[35]

17. The Department expects to recover some of the £3.84 million paid out for the 832 ineligible EU students. Of the total £3.84 million, £951,000 has been recovered and the Student Loans Company expects to recover £442,000 million from future payments to alternative providers. The Student Loans Company will pursue the remaining £2.447 million from individual students.[36] It has not estimated its potential loss after taking account of anticipated recoveries.[37]

18. The Department told us that it lacked data to allow it to readily estimate how much public money was at stake when larger numbers of students than expected failed to complete their qualifications.[38] Dropout rates were higher than 20% at nine alternative providers in 2012/13.[39] The Department expects dropout to be higher on average in alternative providers than in the traditional HEFCE-funded sector due to factors such as students at alternative providers often being older or from lower socio-economic backgrounds.[40] However, the Department has not defined an expectation of what might constitute an acceptable dropout rate, or investigated those providers with high dropout rates. The Department has also not examined to what extent high dropout rates indicate a poor quality of teaching and support, and the impact this might have on genuine students.[41]

19. There is a 20% difference between the number of Higher National students enrolled with alternative providers and the number registered with Edexcel, the qualification awarding body. The Department was not able to explain the difference although it told us it was pursuing the matter with Edexcel.[42] However neither Edexcel nor the Department knew for how long the 20% gap had existed. The Department told us that it would be introducing a measure to prevent unregistered students from receiving student support but that this would not be in place until January 2015.[43] The Department had not carried out any investigation to reconcile the difference in the data, or to confirm the absence of fraud in the system.[44]

27   Department for Business, Innovation & Skills, Higher Education: Students at the Heart of the System, white paper, Cm 8122, June 2011; Q240 Back

28   Q 240 Back

29   C&AG's report Figure 7, Figure 8 Back

30   Qq 1-4, 238-246 Back

31   Qq 248; C&AG's report Figure 2 Back

32   Qq 6-19, 248-253 Back

33   Q 80; C&AG's report para 2.2 Back

34   Qq 78, 80 Back

35   Qq 80, 133-155 Back

36   Qq 86-98, Q128 Back

37   Qq 133-138 Back

38   Qq 248-253 Back

39   Q 72; C&AG's report para 3.4, Figures 7 and 9 Back

40   Qq 71, 237-238, 248; C&AG's report paras 3.8-3.9 Back

41   Qq 72-73, 186-187, 248-249; C&AG's report para 3.10 Back

42   Q 20; C&AG's report para 3.13 Back

43   Qq 25-30, 35, 42-45 Back

44   Qq 38, 48-61 Back

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Prepared 24 February 2015