Organised crime may be reaping the benefits of student loan fraud, amounting to £60 million in funding, within unregulated colleges in England due to inadequate oversight, as outlined in a report by the National Audit Office (NAO).
The illicit scheme, which allegedly involves the creation of fake student identities and the manipulation of loan disbursements, has raised serious concerns about the vulnerability of the student finance system in the United Kingdom.
NAO has highlighted "several instances of potential fraud and abuse" occurring at private higher education providers. These institutions offer courses leading to degrees conferred under franchise agreements by mainstream universities as part of a commercial arrangement.
According to the report, certain providers are enrolling students who show little or no interest in completing a course.
However, these students can still apply for government-backed maintenance loans, which can amount to a substantial sum of up to £13,000.
The provider, in turn, can secure £9,250 in tuition fee loans. A portion of this is then remitted as a franchising fee, reaching up to £3,000 per student, to the university awarding the degree.
There are also reported cases where agents are enticed with substantial commissions to enrol students.
The investigation has prompted calls for a comprehensive review of the student loan application process, with experts highlighting the need for enhanced security measures and improved verification protocols.
Instances of fraud identified by the Student Loans Company (SLC), responsible for managing the government's loan system, encompass organised crime participation, identity theft, and the use of forged documentation.
This week, the public accounts committee of the House of Commons declared its intention to conduct an inquiry into the oversight of franchise prov ..
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