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.
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.
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.
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
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.
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.
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.
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.
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.
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
It has not estimated its potential loss after taking account of
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
Dropout rates were higher than 20% at nine alternative providers
in 2012/13. 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.
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
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.
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.
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.
27 Department for Business, Innovation & Skills, Higher Education: Students at the Heart of the System, white paper, Cm 8122, June 2011;
Q 240 Back
C&AG's report Figure 7, Figure 8 Back
Qq 1-4, 238-246 Back
Qq 248; C&AG's report Figure 2 Back
Qq 6-19, 248-253 Back
Q 80; C&AG's report para 2.2 Back
Qq 78, 80 Back
Qq 80, 133-155 Back
Qq 86-98, Q128 Back
Qq 133-138 Back
Qq 248-253 Back
Q 72; C&AG's report para 3.4, Figures 7 and 9 Back
Qq 71, 237-238, 248; C&AG's report paras 3.8-3.9 Back
Qq 72-73, 186-187, 248-249; C&AG's report para 3.10 Back
Q 20; C&AG's report para 3.13 Back
Qq 25-30, 35, 42-45 Back
Qq 38, 48-61 Back