Allegations over students claiming loans with no intention to pay them back

Sky News reports that, “Fraud experts are set to investigate suspicions thousands of students are fraudulently claiming hundreds of millions of pounds in student loans with no plans to study - or pay the money back.”

The news comes out after a Sunday Times investigation, which looked into finance documents, company accounts and interviewed sources from the Student Loans Company (SLC), the Department for Education, the Office for Students (OfS) and university lecturers – according to university world news.

The investigation reports that students are enrolling on degree courses despite “absolutely no academic intent”, so that they can claim thousands of pounds from loans and with “no intention” of repaying the money back.

Financial loss

When applying for university, one of the first steps is getting that student finance application done as soon as possible. The gov.uk website says, “If you're a full-time student, you can get up to £9,535 (in loans.) If you're studying an accelerated degree course, you could get up to £11,440.”

With students only having to pay back their loans once their income reaches a certain threshold, starting at about £25,000 a year and getting written off after 40 years, some never reach the stage where they have to pay it off. Therefore, if this scandal is proven true, students applying for student loans without the intention to ever study could be conning their way into free earnings.

Education Secretary Bridget Phillipson says it is, “a hammer blow to the integrity of higher education."

Romanian involvement

The aftermath of the Sunday Times investigation also revealed the concern of a potential “organised recruitment” of Romanian nationals to enrol on courses.

Romania Insider says, “Romanians are reportedly among those suspected of a massive fraud of the student loan system in the United Kingdom.

“The alleged fraud, according to the report, could amount to hundreds of millions of pounds.”

Sources suggest that lots of loan contracts have been taken out by individuals identifying as Romanian citizens, but it is unsure whether identity theft might also be involved.

The investigation did not target Romanian students specifically but instead the franchised universities which have been called out instead, with at least six providers identified for involvement in the fraudulent “for-profit” scheme.

It is said that such ‘franchised’ universities are enrolling students that do not speak English adequately. Romania Insider suggests that these institutions are accepting screenshots of Duolingo tests as proof of language proficiency and “at some universities with franchised providers, between 35% and 55% of applicants last year were Romanian.”

These accusations have been confirmed by The Sunday Times which notes that the loan requests and the enrolments “are conducted entirely online and are hardly ever verified.”

Whilst identity theft may be at play, the facts provided by UK Government figures reveal an alarming increase in the number of Romanian citizens applying for student loans. Since 2015-16 the loans handed to Romanian students have inclined from 5,000 to 84,000 in 2023-24, suggesting 15% of the Romanian population in the UK to have received a student loan in the past academic year.

Reformed student loan repayments

However, despite the scandal due to the alterations to student loan settlements for new students, the number of future students paying back their loan will increase, which could lessen the blow (at least for the higher education system financial providers.)

The House of Commons Library says, “The Government forecasts that around 65% of full-time undergraduates starting in 2023/24 would repay them in full. This is more than double the forecast for the 2022/23 cohort (27%) because of reforms to student loan repayments for new students.”

The hit of a scandal

With the recent reports of higher education systems struggling due to funding cuts, this scandal could just prove to be another hit that will lead to more universities making cuts to staffing jobs and courses.