For-profits waiting as English regulator mulls register refusals

England’s regulator has told 20 providers that it plans to exclude them from its new register and thus bar them from public student loan funding, while the country’s biggest for-profit college is among a separate group still awaiting a decision.

The Office for Students has sent “minded to refuse” letters to 20 providers that have sought to be included on its register of providers, papers from its latest board meeting reveal. There was a total of 465 applications for inclusion on the register, which providers must be on to be eligible to receive Student Loans Company funding. All established universities are already on the register.

A spokeswoman for GSM London, which recruits more students with SLC funding than any other alternative provider, with 4,587 such students in 2017-18, said: “GSM London has not received any such correspondence [a “minded to refuse” letter] from the OfS. Our application is still under consideration, and we have been working closely with the OfS to provide all the information they require for this process.”

Times Higher Education reported in December that GSM’s accounts had revealed that it made a net loss of £9.9 million last year, and that £26 million of its debt had been waived as part of a turnaround plan agreed with its owners. This followed reports that GSM, which is ultimately majority-owned by private equity firm Sovereign Capital, had previously been in talks with the Department for Education about fears that it could collapse into administration.

Two other big names in for-profit higher education, St Patrick’s College and the London School of Business and Finance, both owned by Global University Systems, are also not present on the OfS register.

A GUS spokesman said that LSBF did not apply for registration, and that St Patrick’s had applied but has not received a “minded to refuse” letter and is awaiting a decision from the OfS.

When contacted by THE, the OfS said it would not name the providers sent “minded to refuse” letters at present.

The OfS will “allow providers to make representations to us before we reach a final decision”, and only after that will they be named, a spokesman said.

The University and College Union said the OfS needed to provide “far more transparency in this area so students know what type of institution they are studying at, who is profiting from their tuition fees and any concerns the regulator has about it”.

The debate has been given extra salience by the revelation in the OfS’ publication of its recurrent teaching grant allocations for 2019-20 that a number of for-profit colleges are to receive direct public funding from the UK government for the first time after being included on the register of providers. Teaching grant, distinct from access to public student loans, covers mainly support for high-cost subjects and the costs of teaching disadvantaged students.

The new providers with the biggest grant allocations are all for-profits or for-profit owned: the British and Irish Modern Music Institute (BIMM), owned by Sovereign Capital (teaching grant of £2.4 million, including £853,000 in high-cost subject funding); Arden University, owned by GUS (£1.5 million); SAE Education (£1.4 million); the University of Law, also owned by GUS (£733,000); and Pearson College London, owned by FTSE 100 company Pearson (£707,000). Pearson College London contacted Times Higher Education to say that it “has been not-for-profit since its inception in 2012 and its articles of association have always prevented it from distributing any dividends”.

The need to allocate about £10 million in total to these new providers was among the factors that will cause average grant funding per student across all providers, including universities, to drop by 4 per cent.

john.morgan@timeshighereducation.com