Degrees of Deception: How the UK’s Student Loan System Became a Fraudster’s Paradise

Universities Money Laundering Schemes: Student Loan Fiasco Exposed

In a stunning display of bureaucratic awareness that would impress even the most oblivious of observers, Education Secretary Bridget Phillipson has launched an investigation into what she calls “one of the biggest financial scandals universities have faced” – as if this particular train wreck wasn’t visible from miles down the track.

The revelation that thousands of students are allegedly enrolling in degree courses with zero intention to study – but every intention to pocket up to £25,440 in loans – has apparently caught our government completely by surprise. Who could have possibly foreseen that a system designed to hand out massive sums with minimal oversight and four decades to repay might attract opportunists?

Student Loans Company (SLC) also identified suspicious applications involving fake documents and address duplication, along with franchised colleges enrolling students who can not speak adequate English, the paper said.

Phillipson said SLC had been working with law-enforcement agencies to investigate the prevalence of some Romanian students at certain colleges, but not enough was being done to stop wider abuse.

“But today’s revelations demand that we must go further and faster to protect the public purse.

“I will not tolerate a penny of taxpayers’ money being misused,” she wrote.

She added franchising in some universities had been “less about expanding access and more about meeting expanding overheads”, and the Office for Students (OfS) – the independent regulator of higher education in England – should have provided “guardrails” in this area.

The money is only paid back once the student has left university and their income has reached a certain threshold, depending on the loan plan, starting at about £25,000 a year. The debt is written off if not paid within 40 years.

Ms Phillipson said she plans to bring forward legislation to ensure the OfS has new powers to protect public money.

The UK’s student loan debt currently stands at £236.2bn.

Students, including overseas students with settled status, can take out government-subsidised loans to help towards their maintenance costs and to cover the cost of tuition fees.

Student Loan Fraud is Rampant—And the UK Government Just Noticed

Phillipson has now dispatched the Public Sector Fraud Authority to investigate this “growing threat” with the urgency of someone who’s just discovered their house has been burning for several hours. According to her, “not enough care was taken to join the dots of wider abuse” – which might be the understatement of the year given that the Student Loans Company had already noticed suspicious applications involving fake documents.

Most of the suspected incidents are concentrated in “franchised” universities – those lovely institutions where established universities outsource their teaching to colleges while keeping their names on the letterhead. Officials are reportedly concerned about “organised recruitment” of Romanian nationals, though you might wonder why it took a Sunday Times investigation rather than, say, the actual regulatory bodies paid to monitor this system, to sound the alarm.

What’s most surprising is that there wasn’t a VIP WhatsApp group set up to fast-track these fraudulent applications. After all, the previous Tory administration perfected the art of funnelling public money to preferred recipients – from PPE contracts to cronies to tax breaks for donors. At least these loan fraudsters went through the tedious process of filling out application forms rather than simply texting a cabinet minister. How quaintly old-fashioned of them to steal public money without the proper political connections.

In response to this absolutely unpredictable crisis, Phillipson promises to bring forward legislation “at the first available opportunity” to ensure the Office for Students “has tough new powers.” Because nothing says effective governance like realising your watchdog has been a toothless observer all along.

A Department for Education spokesperson insisted the government would “stop at nothing to protect public money” – except, apparently, implementing basic verification procedures before handing it out. They also assured us that the government’s “Plan for Change” announced by Prime Minister Keir Starmer in December “will restore trust” in UK universities – though they neglected to mention whether this plan included the revolutionary concept of checking if students actually attend classes before giving them money.

The statement concluded with the tough talk that the government has “powers to claw back payments” and “won’t hesitate to use them.” You can only imagine the trembling among fraudsters who have potentially already transferred these funds beyond reach.

Susan Lapworth, chief executive of the Office for Students, called these practices “entirely unacceptable” and “shocking,” displaying the righteous indignation of a regulator who apparently only just discovered what her organisation was supposed to be regulating.

Meanwhile, legitimate students struggling with genuine financial hardship and mounting debt can rest easy knowing that the government is on the case – about three years too late and several hundred million pounds short.

Of course, you can’t help but notice that universities seemed remarkably more productive—and considerably less prone to being embezzlement schemes—when they were actually free. Perhaps instead of creating ever more Byzantine regulatory bodies to police our marketised education dystopia, we might glance across at Germany’s publicly funded university system, which somehow manages to produce world-class graduates without saddling them with decades of debt. But that would require admitting that turning education into a commodity might have been the original fraud—one perpetrated not by Romanian opportunists, but by successive British governments who convinced an entire generation that their future was best secured by becoming indentured servants to the Student Loans Company. How terribly inconvenient.

Paul Knaggs