Foreign students target private universities for loans

FOREIGN students are targeting “private universities” in order to pocket millions of pounds in student loan payments, a report by the government spending watchdog has suggested.

It is thought that in some cases, students receiving these payments may have dropped out of their courses without informing the lender, or failed to turn up at all.

The number of students studying at the private institutions, known as alternative providers, has more than quadrupled since 2010, following a government drive to get more students into higher education. Their courses are currently £3,000 cheaper than universities, with students able to apply for tuition and maintenance loans.

But a report by the National Audit Office (NAO) reveals that £45 million has been incorrectly paid to students registered at alternative providers – with £36million still to be recovered. This includes more than £16million paid out to European students purporting to have residency in the UK or the European Economic Area, but who subsequently failed residency checks when investigated.

It follows an investigation by the Student Loans Company and Department for Business, which found that £5.4 million had been paid to ineligible EU students in 2014 alone.

The Student Loans Company refused to provide figures on how many students had received payments after dropping out of their courses.

The NAO figures include more than £9.3 million paid out to students enrolled on unrecognised courses between 2010-2014, with £1.3 million relating to fraudulent cases.

The report also found that, compared with universities, alternative providers on average have significantly higher dropout rates, with one in four students failing to graduate.

It notes that, at the worst performing provider, the dropout rate of students was five times higher than the average university.

Speaking to the Telegraph, Meg Hillier, chairman of the Commons public accounts committee, last night warned that the Government was making “mistakes” in the rush to push through reforms in the university sector.

“Rushing at a pace nearly always leads to bad consequences,” she added. “And the Government is rushing to give degree-awarding powers to providers that cannot even ensure their students are staying.”

♦the Prime Minister is facing opposition from Cabinet ministers over her promise to freeze university tuition fees to entice young voters. As well as holding fees at £9,250, Theresa May has announced the salary threshold after which repayments are made would go up from £21,000 to £25,000.

The policy is expected to cost £2 billion per year, according to the Institute of Fiscal Studies.