Uncontrolled expansion: how private colleges grew

More than 10,000 students were contacted and informed that payments from the SLC to them and their colleges were suspended

Greg Clark, the new universities minister, has a revised job specification for his higher education responsibilities. Along with preventing violent extremism and promoting education exports, his ministerial brief states that he will oversee “widening participation for students and providers”. It seems that the term “widening participation” has been redefined to mean encouraging more private colleges into the sector.

In this way, Clark takes on the legacy left by his predecessor, David Willetts, who told assembled university heads at the Universities UK spring conference in 2011 that “the biggest lesson I have learned is that the most powerful driver of public sector reform is to let new providers into the system. They do things differently in ways none can predict.”

Millions of pounds of public funding is already being spent to support study at private providers, but beyond well-known private institutions such as BPP University and the University of Buckingham, a host of less familiar private colleges are benefiting from recent policy changes.

So earlier this year I got off the Tube at Wembley Park and walked past the national football stadium to find out more about one of them: Regent College. I had been invited to meet Selva Pankaj, the chief executive and owner, and senior staff after asking them about their most recent Quality Assurance Agency review and some figures quietly deposited in the House of Commons Library by Willetts before he stepped down. It soon became apparent that there were no easy answers to be had.

Regent College has no connection with the more established Regent’s University London, the well-known private institution based in Regent’s Park. Instead, it is the trading arm of RTC Education Ltd, part of the Regent Group of education institutions.

Established in 2000, the northwest London group includes a nursery and two private sixth-form colleges. A free school, the Gateway Academy, is scheduled to open in the London borough of Brent next year. “What is this business? Children!” explains the group’s page for potential franchise partners.

Regent began to offer higher education courses in 2010-11, but by September 2012 had enrolled only 30 individuals. Reforms to university funding that year, however, gave private colleges new opportunities and incentives to expand into the world of higher education. They had previously been unable to compete with traditional providers on price for home and European Union students, but £9,000 fees changed that. Students at “alternative” providers (private institutions not in direct receipt of public funding) were now able to borrow up to £6,000 per year from the Student Loans Company to cover their tuition fees. All tuition fee loans are paid directly to the provider.

Regent responded, and it did so through the Higher National Diploma, a qualification for which Pearson’s Edexcel examinations group is the main awarding body. An HND is equivalent to two years of full-time undergraduate study.

In September 2012 Regent recruited six HND students. All dropped out. But then intakes boomed. At the time, there were no controls on student numbers for private colleges: once “designated” as eligible for financial support they could sign up as many students as they wished. In January 2013, 145 enrolled on HNDs at Regent; 6 arrived in April, 353 in July and 892 came in September. Then, in November 2013, the government intervened. Regent, along with 22 other fast-growing colleges, had its “designation” status suspended for the remainder of that academic year, meaning that no new starters were eligible for loans or grants from the SLC. But by the time the government hit the brakes, the college had already broken into the top 10 for funded HND students, according to official figures from the SLC. In less than a year, Regent had gone from about 10 such students to well over a thousand.

For-profit Regent is one of several London colleges to have made Pearson’s HND central to its expansion plans. In 2012-13, funded HND and HNC student numbers at private colleges in England increased seven-fold from 2,600 to 18,000, with more than £130 million being issued by the SLC. Another college that mushroomed was St Patrick’s International College, which took its HND and HNC intake from 50 to more than 4,000 in that one year. Overall numbers across the sector are still rising despite the government’s blocks. The Higher Education Funding Council for England now believes there to be roughly 60,000 private students eligible for funding, with the majority of them taking the HND route.

Such proliferation exceeds that envisaged by Willetts when he sought to “open up the system to a wider range of providers”. When he inherited the “designation” scheme in 2010 it funded 4,000 students to the tune of £30 million. Four years later, the Department for Business, Innovation and Skills estimates that £900 million will be dispensed to students at alternative providers in 2014-15, £250 million of that in maintenance grants. Total outlay including students at established universities comes to £10 billion in loans and £1.4 billion in grants, making the alternative sector now almost 8 per cent of SLC-funded undergraduate provision. The government assumes that the estimated loss on loans issued to private students is equivalent to that for those graduating with university degrees (for loans issued in 2013-14, the government expects that the equivalent of 45 pence in every pound loaned will be lost).

Such a transformation would indicate a successful policy were it not for concerns about abuse of the system, low retention rates and poor progression at some institutions.

In the autumn of last year, BIS became concerned about the number of EU citizens at private colleges making claims for maintenance loans and grants. EU citizens can access tuition fee loans by right, but must have been resident in the UK for three years prior to commencing a course in order to access other financial support through the standard route.

More than 10,000 students were contacted by the SLC in November 2013 and informed that payments from the SLC to them and their colleges were suspended pending further proof of residency status. Regent was adversely affected by this move, with more than 600 students suddenly finding themselves without support.

In June of this year, Willetts announced the conclusion of the “exercise”: more than 5,000 claims for maintenance were deemed to have been “ineligible”, including those of students who had failed to respond to information requests. Willetts told Parliament that the government was now conducting a “fraud and debt” review and that action would be taken against any provider found to have been complicit in what he has described as “fraud and abuse”. A breakdown by institution was made available but the institutions themselves were not contacted and there have been no further announcements.

When I showed senior staff at Regent the number of students deemed ineligible by BIS they were shocked. The department claims that 497 of Regent’s students were classed as “ineligible”, the second highest number of such students after St Patrick’s International College, with 691. At Regent, 497 students would have represented roughly 40 per cent of those registered at the college in November 2013. While BIS stands by its numbers, the college disputes the department’s figures and insists that 407 students were reinstated by the SLC. A spokeswoman for the college says “the current SLC system is only showing 229 as blocked payments as a result of November 2013 residency investigations”.

Regent insists that in any case it had no involvement in individual student applications and that responsibility lay with the SLC to verify maintenance claims.

That said, in 2013 Regent gained 70 per cent of its students through one Romanian recruitment agent, whose publicity material on Facebook laid great emphasis on the student loans available, as well as potential grants and benefits, and urged students to “share the good news with all your friends”.

Regent ended that relationship earlier this year. A spokeswoman for the college says: “In July 2014 we agreed to conclude our contractual relationship with the agent and agreed and paid a settlement, terminating the contract. Further, currently we do not have any ongoing relationship with them.”

In January this year, a whistleblower went to Pearson and the QAA alleging malpractice in recruitment and other aspects of academic management at Regent. The QAA initiated a Concerns Team investigation. This case was closed in May.

A QAA spokeswoman says: “QAA carried out an initial enquiry and concluded that there was insufficient evidence to support the complainants’ allegations. The decision was taken not to proceed to a full investigation, and the case was closed. If QAA becomes aware of new evidence of systemic threats to academic standards and the quality of education, a new Concerns investigation could take place.” Pearson also conducted an investigation and closed this in August, saying it was satisfied that no further action was needed.

Regarding its qualification, a spokeswoman for Pearson says: “To ensure standards, we monitor registration, withdrawals and certification. We also visit centres to identify whether they have the processes, systems and resources in place to deliver the qualifications. Where this is not the case, centres would be required to address the issues in order to be able to continue registering and delivering the qualifications.”

In the meantime, the QAA conducted a separate Educational Oversight review into the college, the results of which were published in June of this year. Regent achieved top marks in the three main assessment categories. New regulations around “designation” for 2014-15 mean that “confidence” is now required for students at the college to continue to access SLC funds.

The fact remains that Regent College has so far graduated just 10 HND students in its history and these successes came from small cohorts

The 2014 judgement represents an improvement from the previous June 2013 review, when the college had about 420 students but achieved only “limited confidence” in one area (“that the provider is fulfilling its responsibilities for managing and enhancing the quality of the intended learning opportunities it provides for students”).

However, at the draft stage, the 2014 report still found only “limited confidence” in the same key area. When the college learned of this, it requested and was granted a second visit, which took place in March. It was on the basis of the second visit that the QAA’s judgement was upgraded to “confidence” in all areas. The final report includes the following paragraph: “The substantial rise in student numbers has sometimes led to an increase in class sizes and impacted on the College’s ability to systematically monitor and support student progress in a timely manner. Student cohorts from January 2013 onwards experienced high withdrawal, referral and non-submission rates. The College has not always undertaken a comprehensive collection or analysis of data on student progress or detailed action planning to improve retention and submission rates.” “Referral” in this context is the equivalent to a “fail” on an HND module.

When I asked the QAA how it was able to reach a judgement of confidence given such concerns about withdrawal and non-submission rates, I was told that Regent has now “put in place more robust quality monitoring and data analysis procedures” and that it had “revised its admissions procedure to overcome the difficulties it had experienced with high withdrawal rates”.

Rachael Gee, assistant director of the Reviews Group at the QAA, says that the agency had confidence that the college would now be more rigorous in vetting applicants and would manage its responsibilities appropriately in the future. However, the review did not consider any evidence from the BIS investigation into EU students making ineligible maintenance claims, as the department had not shared its findings.

The QAA’s position is that it has confidence in the new approach to management at Regent and that there is little risk to academic standards. The college admits that lessons have been learned and has complained about a previous lack of guidance around EU students. Future recruitment will be brought in-house and agents will not be used.

But it is worth returning to those “high withdrawal, referral and non-submission rates”. I have had sight of Regent’s assessment board minutes from autumn 2013 and statistics prepared for the 2014 QAA review.

Of the 145 full-time students from the January 2013 enrolment, only two students passed the four compulsory modules that comprised their HND study programme for the first semester. Further, the minutes state that “59 students had neither attempted nor submitted work for any unit”, while “86 had submitted at least one assignment and 25 had not passed any unit”. One member of staff is recorded as commenting on the “root cause” for “such low submission levels”: poor attendance. “Referral” (fail) rates for those who did submit were about 50 per cent. Results for the nearly 300-strong April cohort were little better.

Regent states that it recruits mature students who “take a while to get back into the swing of things” when they return to education and that retakes have meant that progression for those two cohorts has improved. Of the 420 students enrolled in the January 2013 and April 2013 cohorts, 226 advanced into their second year after meeting the requirement to have passed at least six out of their first eight modules. These second-years are now expected to complete the qualification early in 2015.

Student numbers at Regent have dropped substantially. While 2013 intakes at Regent peaked at more than a thousand students, the number enrolled later fell to around 750. Retention was badly affected by troubles around EU students. The college says that many genuine students were unable to support themselves during the period in which SLC payments were suspended.

A spokeswoman for Regent says: “We feel it has been recognised, by QAA and Pearson, within their respective reports, that the college is taking the necessary steps to improve student achievement.”

Yet the fact remains that Regent has so far graduated just 10 HND students in its history and these successes came from small cohorts. Even then, those 10 were just one in three of those who signed up. Regent’s learning curve has already been heavily subsidised by the taxpayer. In the last financial year, the college received more than £4.5 million from loan-backed tuition fees. Larger sums would have gone to students as loans and grants for maintenance support.

Profits at the parent company, RTC Education, owned by husband and wife team Selva and Tharshiny Pankaj, hit £1.3 million in 2013-14 on the back of this growth; up from £240,000 and £56,000 in the previous two years. No dividend was issued last year, but the previous year saw the Pankajs split a £100,000 payout. The college insists that profits are being reinvested in new buildings, facilities, management technology and experienced staff. Its focus, it says, is on the service it provides to its students. Following the QAA’s judgement of confidence, BIS officially “redesignated” Regent in September, making the college’s students eligible for support once again. The college aims to recommence recruiting in the spring.

On that score, it is not clear if BIS had sight of Regent’s 2013 student attainment and progression statistics before reaching a decision. The QAA passed its draft and final reports on Regent to the department, but refused to comment on whether the retention and progression figures were included in the draft (they are not in the final version and the draft is not in the public domain).

This may represent a general problem. Although BIS knows, via the SLC, how many students have been funded to study the HND full time, it does not appear to have ready access to progression data. Pearson confirmed that it does not routinely liaise with the SLC and does not maintain data on whether students are funded or not.

A spokesman for Pearson told me in February: “As the awarding body we do not have that relationship with the SLC. However, Pearson is working with both BIS and SLC to establish an appropriate way for the SLC to have fuller visibility of what is happening at the various stages of HNC/D courses.”

Pearson allows students registered on the HND five years to complete, in effect treating them as part-time students. On the other hand, Regent’s students are funded as full time for two years (granting them access to maintenance support which can exceed £11,000 per year for students in London). Both Pearson and the SLC rely on the college to report independently on student numbers and no cross-checking of the data provided occurs. A Pearson “verifier” visits colleges once a year to review the marking of assignments carried out by a college’s own staff. The latest such report for Regent came in August. It was successful, with the verifier commenting positively on “significant improvements being made to the quality of delivery within the college”.

The National Audit Office is currently conducting an investigation into private college designation and control of public finances. BIS has put its faith in the introduction of number controls and a tougher designation review, which now includes due diligence checks on college governance and finances.

A spokesman for BIS says: “We introduced a new system of designation of alternative providers, which means that all providers will have their designations reviewed during 2013-14. If they do not meet the requirements of the system or do not apply, their designations will be withdrawn. These arrangements strengthen protection for students by requiring providers to complete a rigorous Quality Assurance Agency review and reinforce assurance on the use of public funds.”

I set out with questions for Regent but ended up with more about the designation process.

There appear to be serious issues regarding communication between the colleges and the numerous sector bodies involved. The BIS investigation into ineligible maintenance applications does not appear to have fed into the redesignation procedure or, indeed, to have been circulated after the figures were filed in the House of Commons Library. It is frankly bizarre that colleges have not been contacted about those findings and not been given the opportunity to challenge them. And with millions of pounds flowing into this part of the sector, where are the efficiency gains that ministers hoped would follow from increased private sector involvement in higher education? What dropout rate would represent a “good return” for the taxpayer? The bodies involved do not appear to have agreed a benchmark. One might feel that the QAA should be seeking stronger track records before reaching judgements of confidence.

But perhaps actions elsewhere indicate that the government’s stated confidence is not the full picture. The goalposts are about to shift again. Pearson is currently conducting a major review into Higher Nationals, looking at all aspects of the qualifications, while BIS has been consulting on moving the qualification from higher education into further education funding streams as well as extending to five years the standard route for EU citizens to qualify for SLC maintenance support. Such moves would curtail the availability of maintenance loans and grants for students and radically limit the flow of public funds here. Earlier this month, Hefce announced plans to review all quality assurance and an intention to tender the work now being done by the QAA. “In such a rapidly evolving sector, we must focus on future needs and ensure that the quality assessment system remains fit for purpose,” its statement reads.

As for Regent, the college’s website states: “We feel that we have, without question, met the objectives laid out in the 2011 White Paper, ‘Students at the Heart of the System’. ” And it would be hard to argue with that.