Franchised higher education – where a student studies for a course designed by a lead provider at a partner provider – is not a new idea.
Many older providers started off teaching to prepare students for exams managed by the University of London. Others have roots as regional outposts of established providers, bringing the opportunity to study to underserved areas.
The idea of the franchise is that there is an intellectual property in learning – that a course in business written by academics at one provider has a quantifiable value even when delivered by other academics elsewhere. It’s a branch campus without a branch campus, an expansion of capacity without the investment.
In recent years it has become a locus of suspicion. Unscrupulous universities (to this government, is there any other kind?) stacking up top-sliced fee income while fobbing students off with (at best) a substandard experience or (at worst) actual fraud.
Guilty as sin
Fundamentally, franchise agreements are underregulated and under-scrutinised at a national level. There’s been numerous investigations (not least on Wonkhe, and latterly by the National Audit Office). We’re beyond regulatory concerns and marching bravely into the neighbourhood of actual criminality.
Today’s final report from the House of Commons Committee of Public Accounts is commendably blunt and concise. Dealing with headline-worthy figures – £2.2m of student loan fraud, a doubling of franchise students since 2018-19, and franchise fee rentions of up to 30 per cent (nearly a third of student fees going to a provider that is not teaching the student in question) make plain and pragmatic recommendations feel achievable and proportionate.
And yet, it could have been so much more. The recommendations concern administration and responsibility, and go some way towards fixing the gaping holes in regulation there since 2017. We will, if implementation follows smoothly, know more about how franchise agreements work, how students progress through their courses, and know which organisation has responsibility for which parts of due diligence, monitoring, and enforcement. But that’s all.
Who’s afraid of little old me?
If you think back to the franchise fraud test case described in the National Audit Office report, the central problem faced by the Office for Students (OfS), the Department for Education (DfE), and the Student Loans Company (SLC) was one of overlapping and unclear responsibilities.
When fraud comes to light, each of these bodies has a legitimate interest. OfS has an overall responsibility for quality and standards within the sector, and also on governance and finance for providers that it has registered – though it has no explicit responsibility relating to fraud. SLC has an interest in reclaiming fee loans paid to the provider (something that OfS can bring pressure to bear on where the provider is registered) and any maintenance loans or disabled student allowance paid to the student (working in the later case with National Economic Crime. DfE, for its part, is answerable to ministers (and thus parliament) for the use of public funds and the conduct of the regulator and loan issuer – in some cases it also needs to issue specific instructions to OfS and/or SLC. To act swiftly and decisively, the three bodies need to agree what needs to be done and get the relevant paperwork in order.
In the test case, this did not happen. Opportunities were missed, it took time for key information to be shared and key decisions made. The suggestions made by the committee concord with the plans that OfS, SLC, and DfE already have – regular meetings, and information sharing by default rather than by exception.
DfE recognised the advantages in having transparency between the three bodies, which enables them to take a collective view across an issue. OfS noted that there are some legal constraints on how it can share information, so it needs to work within its legal parameters. However, it now has clear information sharing protocols, from OfS to SLC and vice versa, and from both SLC and OfS into DfE. OfS concluded that all three are confident that they would not end up in [this position again]
I can do it with a broken heart
Long before the OfS became the responsive regulator we all know so well, the plan was to have three levels of registration. Approved, and Approved (Fee Cap), made it through to implementation – the proposed Basic category was scrapped as unworkable (the official reason being that a registered status, however basic, said things about a level OfS oversight that were not accurate). The idea was that every provider that delivered any form of state-supported higher education would be listed, and this listing could be revoked (and thus permission to work as a franchise partner removed) at the behest of the regulator.
As history relates, this did not happen. In some respects, this aside is a little bit of a red herring: Leeds Trinity University has apparently behaved notably enough to start a regulatory investigation, but four of six of the providers involved in franchised course delivery are registered with OfS (the report suggests that 35 per cent of the 355 franchisees in the sector are registered). Yet in this instance the choice has been made to investigate the franchiser rather than the franchisees.
DfE, for its part, equivocates that
Even if a provider could not meet all the (current) registration criteria it might still be a good franchisee [though] equally, if providers do not pass that threshold, it would be right to question them providing a service for students
The department is actively considering whether to impose additional controls, such as requiring all providers to be registered with OfS. And this – eight years too late – is the basis of a recommendation that DfE sets out exactly what it intends to do about oversight.
I can fix him (no really I can)
It makes sense to separate out the information recommendations from the mechanism ones. The committee is clear that students should be aware that they are at a franchise provider, and how much of their fees go to the franchiser rather than the place they study. They should also get information on student outcomes (the usual continuation, completion, progression) from the provider they are at rather than where they are registered.
This is a very “class of 2017” recommendation in that it puts the onus on a fully aware student making otherwise unconstrained choices in an information-rich marketplace. The fact that many of these students are not actually aware they are learning as a part of a franchise arrangement would suggest to me that, even if this idea works elsewhere in student recruitment, it is not suitable for this particular corner.
Frankly, the regulator should have sight of contractual conditions linked to the delivery of learning – the regulator should have the ability to step in where franchise levies are too high or academic oversight is unsuitable. Simply publishing outcomes data or, gods forbid, contractual information – long past the point where the students affected could have been helped – achieves nothing.
Down bad
Student fees are released to providers based on engagement and attendance declarations made to the Student Loans Company. If you want fees for an autumn term delivery, attendance needs to be confirmed by the third Wednesday in October. The Office for Students also has an interest in attendance (and, until recently, projected attrition) as a part of the HESES process that triggers additional funding. UKVI wants attendance and engagement information with respect to the visa conditions placed on international students. But there is no common, meaningful, definition of what attendance or engagement actually means – it varies, in practice, between providers and courses.
A common definition makes instinctive sense. It would certainly help with transparency, and with data burden, even though it may erase some of the edge case flexibility. It’s the kind of thing you could do easily if you were keen to properly tackle the rats’ nest of data collection requirements that the government and linked agencies make of small institutions. The committees’ ire should really be directed at the fact that we are otherwise content with these overlapping definitions and repeated data requests. The committee recommends that DfE make a ruling based on engagement with the sector – but there have been promises like this made before (data reduction task force, anyone?) and no answers.
How did it end?
The committee is no stranger to apocalyptic language. Chair Geoffrey Clifton-Brown has the lead comment, which is worth repeating in full.
A back door into the student loan system for organised fraudsters has been left hanging wide open here by the lack of oversight by government. Fraud involving franchised providers now makes up a little over half of all fraud identified by the Student Loans Company. Our Committee’s scrutiny has now long established that tackling fraud cannot be left to the experts, but the fight needs to be prioritised and led from the top.
These issues must be addressed with some urgency, as the use of franchised providers only looks set to grow. Indeed, concerningly, the franchising out of education seems to be viewed by some providers as a way of underpinning their finances. The risk to the taxpayer from unchecked fraud is clear, but the systemic risks to the quality of education provided to students must also be taken in hand. Shockingly, up to 30 per cent is retained from tuition fees by lead providers under the franchise system without students necessarily knowing it’s happening. We hope the recommendations in our report help the Government ensure transparency and robust oversight of the whole sector.
In these terms, what the committee actually recommends (data sharing, information provision, guidance and advice, definitional clarity) does nothing to prevent fraud, or even a poor student experience. There is nothing here that could stop, by itself, further millions being siphoned off by bad actors. There’s no actual new powers or responsibilities set out.
And if you take the long view – that an explosion of low quality franchise arrangements is a direct consequence of the financial pressures placed on the sector as an active policy decision – there’s no action at all. Even if we do manage to burst this bubble of concerning institutional behaviour (possibly harming the valuable work that franchise arrangements do for participation and access in the process), there is nothing to stop quality being held hostage to financial stability elsewhere.
