Source: SuperStock

Count it up: private providers collect £0 million in funding from the Student Loans Company, up from £104 million in 2011-12

Two for-profit colleges, GSM London and St Patrick’s International College, each now receive more mainstream public funding for their teaching than the London School of Economics as part of a state-backed bill for private higher education that is at £0 million and rising.

The failure of the Department for Business, Innovation and Skills to control funding to private providers is thought to be one factor in a departmental overspend of £1.4 billion in the coming two years, resulting in the threat of more cuts for universities.

The first of these cuts was due to be outlined in the government’s delayed “grant letter” to the Higher Education Funding Council for England, which still had not been published as ̽����Ƶ went to press.

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In November, BIS suspended Student Loans Company funding for higher national certificate and higher national diploma courses at 23 private colleges amid concerns about rapid rises in their student enrolments.

Now figures published last week by the SLC reveal the private institutions where the company’s bills are highest and growing fastest.

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Total SLC funding for students at private providers (fee and maintenance loans, plus grants) rose from £104 million in 2011-12 to £0 million in 2012-13. The rise came as the fee cap for private providers was increased by BIS from £3,375 to £6,000 for 2012-13.

GSM London, owned by the private equity firm Sovereign Capital, where loan funding was not suspended, has the biggest total of SLC funding for students of any private provider (having almost doubled from £23 million to £44 million in 2012-13).

Second highest is St Patrick’s, one of the colleges where funding for HNCs and HNDs was suspended. There, 4,154 students were receiving fee loans in 2012-13, and total SLC funding soared to £42 million. Yet the previous year, the number of SLC-funded students at the college was below 50, meaning that St Patrick’s was too small to be listed in the SLC’s figures.

GSM London and St Patrick’s each received about £11 million in fee payments from the SLC for students in 2012-13 – more than the corresponding figures for internationally renowned institutions the LSE (£8.5 million) and Soas, University of London (£6.8 million).

Unlike universities in receipt of direct public funding, private providers are not yet subject to any cap on how many SLC-funded students they may have.

Liam Byrne, Labour’s shadow universities, science and skills minister, said the SLC figures were “fresh evidence of the government’s shambolic approach to student finances”. He warned that it was “becoming clear that students will have to pay the price. Ministers need to get a grip and tell us how they’re going to clear this up.”

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Third highest among private providers on the SLC funding list is Essex International College. At that institution, which offers an SLC-funded HND in business management and where funding has not been suspended, total SLC funding for students ballooned from £1.5 million to £14 million in just one year.

On the homepage of its website, Essex International College says that its campuses are “in partnership of [sic] the UK’s department of Business Innovation and Skills (BIS) as well as the Student Loan Company (SLC)” and “continue to be financed through government backed loans enabling all accommodation and tuition expenses to be covered throughout the duration of the course”.

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Recruiting closer to home

The government’s tightening of the visa regime is thought to have prompted some smaller private colleges to switch their recruitment focus from non-European Union students to home and EU students, particularly from Eastern Europe.

Daniel Khan, St Patrick’s principal, said there has been a “sustainable growth” in demand for HND programmes at his institution over the past two years. “The courses have been a great success due to their flexibility and practical focus, which is helping many students progress their careers.”

He added: “Our focus is on students from the UK. The number of students from Bulgaria, Romania and other Eastern European countries is quite small.”

An Essex International College spokesman said that “due to an increase in demand for our course by UK national students”, the college “went through a significant expansion during 2012 and we currently now have nine campuses throughout the UK. Only a handful of our students are EU students, with the overwhelming majority being British UK nationals.”

GSM London opened a new campus in Greenford, West London, last year. Alison Wride, the institution’s provost, said: “The growth that GSM has achieved is a result both of our investment in campuses, allowing us to offer more student places, and the quality and attractiveness of our courses to students.”

GSM London has now passed an institutional review by the Quality Assurance Agency, after having fallen short on two of three criteria on the initial review in 2012.

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john.morgan@tsleducation.com