WIREDGOV

Education Secretary announces reforms to tighten rules on fraud in the student finance system that cost taxpayers £2m in 2022/23.

Students and taxpayers will have greater confidence in higher education as tough new reforms through our Plan for Change tighten controls on university franchising arrangements and make sure public money is used as intended, shoring up the reputation of our world-class sector.

Franchiser providers with 300 or more students will soon face mandatory regulation by the Office for Students and be required to meet the same standards as universities or be completely cut off from accessing student loan funding in 2028/29. 

Franchising allows universities to subcontract teaching to other organisations—such as colleges or private training providers delivering specialist courses like health or business. When done well, it can widen access, however rapid growth and inconsistent oversight that this government inherited have left parts of the system open to abuse.

The government is determined to ensure every student receives high-quality education, with the new measures putting students and their outcomes before profits as regulators could face fines or suspension of their registration if they have concerns about poor-quality provision, financial exploitation, or fraudulent practices. 

This poor practice has real consequences for young people’s futures and cost £2 million to the public purse in 2022/23 alone.

As part of the crack down, Education Secretary Bridget Phillipson will write to all providers setting out the changes and warning that poor-quality or exploitative arrangements must be cleaned up or closed down.

Education Secretary Bridget Phillipson said: 

Too many rogue operators have treated students as a route to fast cash, not as people investing in their future.  

Those days are over. If you use public money, you will be held accountable and face proper scrutiny. 

Our higher education sector is one of Britain’s greatest strengths. Through our Plan for Change we are determined to protect its reputation, putting students first and making sure every pound from the public purse is well spent.

The number of students at franchised providers has more than doubled in five years, with nearly sixty percent taught at providers not directly regulated by the Office for Students.

With students on franchised courses currently far more likely to drop out and far less likely to progress into work or further study. Just three-quarters complete their courses - compared with almost nine in ten across the rest of the sector. 

These measures will crackdown on courses where there are clear signs of exploitation, such as admitting students who are unlikely to succeed – for example, those with very poor English language skills or students who have low attendance rates and those who are using their place at the provider purely to access public money.  

These robust reforms come as the Government publishes the outcomes of its consultation, proposing measures to strengthen oversight of higher education franchising. Regulations to enable the changes to HE franchising will be laid before Parliament in Spring 2026. 

These reforms will work alongside tougher OfS registration conditions on management and governance standards, stronger system controls to prevent fraud, and cross-government work led by the Public Sector Fraud Authority.

Measures outlined in the Post-16 White paper to lift quality, shut down poor practice, and tighten controls on public money to ensure a higher education system that provides quality for all students regardless of where they study as part of our Plan for Change. 

Vivienne Stern MBE, Chief Executive of Universities UK said:

It is vital that franchise provision is underpinned by high and robust standards and we support this step, which will help to protect the higher education sector’s world-renowned reputation for quality.  

UUK’s members have been taking extensive actions to tighten controls, and we have long championed the introduction of measures requiring franchise partners to register with the OfS.

The Office for Students is also strengthening its own regulatory regime for franchising, including tougher initial registration conditions on governance and the management of public money, publishing annual data on outcomes for franchised students, and consulting on new requirements for universities overseeing franchise partnerships. 

Office for Students, Director of Regulation, Philippa Pickford said:

Today’s announcement will help ensure students studying under subcontractual arrangements are getting a high quality higher education, as well as giving taxpayers confidence that public funding is being used appropriately.

We have been raising concerns about poor practices that have been exposed in some subcontractual arrangements for some time, and plan to announce a response to our own consultation on subcontractual arrangements in higher education in early 2026.

This summer, we also announced reforms to our registration process that will allow us to register institutions that will deliver high quality higher education and treat their students fairly.

Ministers will also legislate, when parliamentary time allows, to give the OfS stronger powers to act quickly where quality is compromised or public money is at risk, ensuring problems in franchised provision can be dealt with more rapidly in future.