Cliff Notes
- The Public Sector Fraud Authority is launching an investigation into allegations that thousands of students are fraudulently claiming substantial student loans with no intention of studying or repaying the amounts.
- Education Secretary Bridget Phillipson has emphasised the seriousness of the situation, describing it as a potential major financial scandal in higher education and pledging to introduce new legislation for stricter oversight.
- The investigation was prompted by suspicious loan applications, particularly involving “franchised” universities and potential organised recruitment of Romanian nationals, raising concerns about broader systemic abuse.
Investigation launched into student loan fraud allegations
Fraud experts are set to investigate suspicions thousands of students are fraudulently claiming hundreds of millions of pounds in student loans with no plans to study – or pay the money back.
The Public Sector Fraud Authority has been directed by Education Secretary Bridget Phillipson to start work immediately to halt the “growing threat” and support investigations that are already under way.
It follows a Sunday Times investigation which reports students with “absolutely no academic intent” are enrolling on degree courses in order to claim tens of thousands of pounds with no intention of repaying the money.
For the 2025-26 academic year, students can apply for tuition fee and maintenance loans of up to £25,440.
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.
Most of the suspected incidents are believed to be at “franchised” universities – colleges paid to provide courses for established universities – and officials are concerned there is “organised recruitment” of Romanian nationals, the Sunday Times reported.
The investigation into the system came after the Student Loans Company noticed suspicious applications involving fake documents, it said.
‘Not enough care taken to join the dots’
In her piece, Ms Phillipson said the “revelations” deal “a hammer blow to the integrity of higher education” in the UK and “demand the firmest action”.
The Student Loans Company has been working with law enforcement agencies to investigate the prevalence of some Romanian students at certain institutions, the education secretary said, “but not enough care was taken to join the dots of wider abuse taking place across the system and to slam the door shut on widespread abuse”.
Ms Phillipson said she will also bring forward new legislation “at the first available opportunity” to ensure the Office for Students “has tough new powers to intervene quickly and robustly to protect public money”.