Imagine a stranger on the internet promised you thousands of pounds, transferred straight to your bank account from a foreign government, without any attached strings whatsoever. Now imagine your friends back home could get in on the action too, and that you’d receive bonuses for every one you referred. Better still, imagine the whole process could be repeated again next year, with all the troublesome paperwork handled by a third party. It sounds too good to be true. In fact, it’s the pitch international criminals have long circulated online — and exactly the reality across Britain’s student finance sector.
Our higher education system is facing an unprecedented level of fraud, after decades of policy blunders and lax oversight. Organised crime networks are exploiting funding loopholes, using sham students to extract hundreds of millions of pounds in public funds. Thousands of these “students”, many with no intention of ever studying or repaying, have enrolled in degree courses purely to cash in on easily accessible loans, turning a scheme meant to expand educational opportunities into a sordid free-for-all. The emerging picture is one of brazen criminality, with the Student Loans Company (SLC) uncovering at least six questionable college partnerships that facilitate these loans. Over the last academic year alone, the SLC flagged over 3,500 suspicious applications that exhibit clear signs of fraud. That’s equivalent to around £60 million — yet after decades of limited oversight is clearly the tip of the iceberg.
The mechanics of the fraud are shockingly simple. Applicants enrol online in university courses, often never setting foot in a classroom, but still triggering tuition and maintenance loan payments. Because finance applications and course registrations are largely taken on trust, with virtually no in-person verification, fraudsters can game the system remotely. Much of the scam centres around so-called franchised colleges: private institutions that offer degrees on behalf of accredited universities. These smaller colleges have become a weak link in the chain. Showing a willingness to admit candidates with minimal vetting and lower entry requirements, they make it easy for opportunists to pose as students.
During enrolment, proper registration can be bypassed via forged credentials and identities. Organised crime groups submit bulk applications using fake documents or duplicated addresses to meet eligibility checks. Many franchised colleges are also willing to admit individuals who speak little to no English, accepting dubious evidence of English proficiency, including screenshots of Duolingo tests. At one Manchester college, students barely had enough English to understand the onboarding process. Once registered, a large number of the fraudulent students then immediately quit their courses after receiving the first instalment of the maintenance loan, around £4,000, before re-enrolling in a new course the following year.
In fact, these schemes have proven so lucrative that they have led to certain international communities embracing the opportunities en masse, repatriating ill-gotten gains back to their home countries. Roughly 15% of all Romanian nationals in Britain received a student loan in 2023. The number of applicants from the country surged by over 1,500% over the eight years prior. Romanian students now make up over half of all applicants at several franchised college providers. This has been driven, in large part, by a wave of Romanian-language TikTok and Facebook videos that propagandise student loans as free money to be sent back home. These posts could easily be mistaken for those of traditional influencers, with videos showcasing tropical destinations, designer clothes, and a youthful recruiter keen to help you get rich quick.
Even worse, many of these influencers are acting as recruitment agents for franchised colleges, profiting directly from each student they refer. These agents actively coach applicants on how to game the system, often using social media to advertise, recruiting students with poor English skills and explaining that they can get paid just to enrol. These agents also engage in commission sharing, with some offering existing students cash lump sums for each friend they introduce to the course: all with no limit on referrals. This web of kickbacks and profit-sharing creates an incentive pyramid, where all parties make money by pushing more students through the door, leaving the British taxpayer footing the bill for all those unpaid loans.
At the heart of this scandal is a structural weakness caused by the rise of franchise partnerships in higher education, with universities increasingly farming out courses to affiliated colleges. This system was designed to widen access and save costs by using off-site providers. Instead, it’s led to widespread abuse with near-zero oversight. Roughly two thirds of franchised providers aren’t registered with the official regulator of the higher education sector, resulting in hundreds of colleges teaching degree courses with no scrutiny from the Department of Education. As a result, quality controls have been scant. Forget the language issue: there is little accountability around whether students even attend classes, leading to some franchised campuses having course completion rates of just 60%.
“In one Manchester college, students barely had enough English to understand the onboarding process.”
All the while, there is a vested interest in keeping this system in place, as the number of students enrolled at franchised providers has almost tripled over the last four years. By 2022, these educational arrangements accounted for just 5% of all student loan borrowers, yet franchised courses made up over half of all detected student loan fraud by value. One franchised college received £234 million in revenue in 2024, with profits increasing 1,200% in just three years. This is despite universities and partner colleges splitting the tuition fees of newly enrolled students, with the lead former typically taking 30% for essentially brokering the deal. For cash-strapped bursars, this provides an uncapped source of secondary income without the need for further infrastructure, teaching staff, or course provisions. For those universities willing to turn a blind eye, and delegate all responsibilities to a college partner, this arrangement can be highly lucrative.
It all speaks to a system utterly unable to keep pace with changing realities. The UK’s student finance model has long relied on an assumption of trust, while funding shifted costs from the state to students and fees continued to rise. Education providers suddenly stood to receive much more per student — yet if loan books swelled, controls have stayed lax. As far back as 2018, a report warned that some private colleges had found a loophole within the funding system. It was hoped that the newly formed Office for Students (OFS) would address the problem. In the years since, however, the regulator has been more focused on political battles in academia than on financial policing, meaning little was done to systematically fortify the loan system against this new type of fraud.
At the same time, government policies inadvertently widened the problem. After Brexit, EU nationals already living in Britain by 2020 retained the right to UK student finance as home students. Despite this being intended as a fair provision for those settled in the country, it also meant that tens of thousands of people from across Europe suddenly qualified for British loans with minimal restrictions. After the Government announced that tuition fees would be frozen at £9,250, meanwhile, universities’ per-student income stagnated, even as operating costs continued to soar. To combat this, institutions sought creative ways to boost enrolment and revenues, driving mass adoption of the very franchise system that’s now proving so vulnerable to abuse.
To be fair, the situation isn’t totally hopeless, with policymakers are now scrambling to bolster the system. In practice, that means new legislation and tougher enforcement measures on organised fraud. In addition to a dedicated counter-fraud team from the Public Sector Fraud Authority, the Government has announced that any college teaching 300 or more students on franchised courses must register with the regulator or lose access to student finance. There are also proposals to give regulators the power to impose instant sanctions on dubious providers; improve verification of student eligibility; and recover funds from universities that ignore fraud. The Department for Education may also link loan disbursements more closely to attendance and academic progress, while strengthening data sharing between agencies to identify fraudulent students.
Yet beyond these short-term fixes, the scandal has done near-irreparable damage to public trust in British higher education. That’s especially problematic given education is one of Britain’s biggest invisible exports. Almost £22 billion comes from fees and spending by legitimate international students a year. These are students who are willing to pay premium fees far in excess of domestic students: essentially due to an academic reputation built over hundreds of years.
It is, therefore, sadly ironic that widespread criminality risks diminishing the appeal of our great academic institutions. This could justifiably fuel a perception that British credentials aren’t what they used to be, as the perceived value of a university education diminishes with every sham course and low-quality provider. If British degrees can be abused on this scale, meanwhile, it raises uncomfortable questions about how much the education sector has been operating on an honour system too easily dishonoured. With over half of franchised providers still unregistered, and therefore free from regulatory oversight, this could easily fuel narratives around a system in chaos.
Either way, the whole scandal once again strikes at the heart of short-sighted policymaking that aims to produce flattering headlines and optimistic metrics — without a willingness to address difficult structural challenges. Widening access to higher education is important, and cutting costs can be helpful. But without the necessary, and far less glamorous, development of a robust regulatory environment for these initiatives to sit in, malignant forces will soon exploit political generosity. This crisis demands a change in mindset from policymakers, and restoring credibility will require more than just one-off raids and attention-grabbing investigations.
Nor, of course, are the lessons here just for vice-chancellors. Time and again we’ve seen well-meaning schemes — from Motability to Covid relief — wrecked by organised fraud. Especially as our high-trust society fades away, it’ll become more important than ever for the Government to build out the actual institutions that prevent graft from occurring. Fail, and the state will continue to crumble far beyond the university gates.
