The Department for Education has made progress towards addressing weaknesses in its oversight of alternative higher education providers, but still has important issues to address before it can provide assurance on current and emerging problems, according to today’s report from the National Audit Office.

The rate of students at alternative providers who drop out of their studies has fallen, but it remains much higher than in the rest of the higher education sector. Between 2012/13 and 2014/15 the non-continuation rate reduced from 38% to 25%, but remains three percentage points higher than the sector benchmark, and 15 percentage points higher than for the rest of the higher education sector. The Department has taken action against all eleven providers with high non-continuation rates in 2014/15. More timely and reliable data would enable the Department to impose sanctions more promptly.

While the Department has reduced the number of ineligible payments to students at alternative providers, it does not have sufficiently timely and specific data to allow prompt measurement of the level of ineligible payments or analysis of trends. Today’s report finds that the number of ineligible payments has fallen as a proportion of all payments made to students attending alternative providers, from 4% in 2012/13 to 0.5% in 2015/16.

The Department has strengthened its oversight framework and it has suspended or revoked payments to providers where intelligence from third parties or its own analysis has identified under-performing or non-compliant providers. In addition there are indications that expansion of the alternative provider sector has helped widen access to higher education for under-represented groups of students. However, early indications are that graduates who studied at alternative providers have lower rates of progression into employment or further study, and lower salaries than graduates of publicly-funded providers.

Under the Higher Education and Research Act 2017, a new Office for Students will take on responsibility for funding and regulating all registered English higher education providers and therefore the Department will stop directly regulating alternative providers.

“The Department is exerting stronger oversight and sanctioning under-performing providers but there remain issues to resolve, such as more timely identification of underperformance and ineligible payments. When the new Office for Students takes over responsibility for regulating alternative providers, it will need more specific, timely and reliable data to get early warning of issues emerging in the sector.”

Amyas Morse, head of the National Audit Office

Read the full report

Follow-up on alternative higher education providers

Notes for editors

£417m Amount paid out by the Student Loans Company to full-time students at alternative providers in 2015/16 34,000 Number of students at alternative providers claiming full-time student support in 2015/16 112 Number of alternative higher education providers designated for student funding as at September 2017 £36 million Total unrecovered ineligible payments in the six years to 2015/16 £10 million Ineligible payments made in 2014/15 and 2015/16 25% Average non-continuation rate for alternative providers in 2014/15 compared with 38% in 2012/13 (on the basis of indicative data) 11 Number of alternative providers with higher than expected non-continuation rates when characteristics of their student population are taken into account (2014/15) 10 Number of alternative providers with lower than expected non-continuation rates when characteristics of their student population are taken into account (2014/15)  
  1. In July 2016, the Department for Education assumed responsibility for higher education including the alternative provider sector. Previously BIS (now the Department for Business, Energy and Industrial Strategy) had responsibility.
  2. In December 2014, the NAO published its Investigation into financial support for students at alternative higher education providers. The re.  The report examined the arrangements for oversight and funding of alternative higher education providers. These are institutions that offer higher education qualifications but that do not receive direct funding from the Higher Education Funding Council for England (HEFCE). They do have students who access public funds through student support. At September 2017, there were 112 alternative providers designated for student support funding.
  3. The Committee of Public Accounts held evidence sessions in December 2014 and March 2015. In February 2015, it published a report which made recommendations for strengthening oversight of the alternative provider sector.
  4. Press notices and reports are available from the date of publication on the NAO website. Hard copies can be obtained by using the relevant links on our website.
  5. The National Audit Office scrutinises public spending for Parliament and is independent of government. The Comptroller and Auditor General (C&AG), Sir Amyas Morse KCB, is an Officer of the House of Commons and leads the NAO, which employs some 785 people. The C&AG certifies the accounts of all government departments and many other public sector bodies. He has statutory authority to examine and report to Parliament on whether departments and the bodies they fund have used their resources efficiently, effectively, and with economy. Our studies evaluate the value for money of public spending, nationally and locally. Our recommendations and reports on good practice help government improve public services. Our work led to audited savings of £734 million in 2016.

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