St Patrick’s warned over finances before getting green light on SLC cash

The government warned it could refuse one of the country’s biggest private colleges, St Patrick’s, access to public student loans because of concerns about its finances, but later gave the green light, saying the worries had been addressed by the college.

Times Higher Education understands that the Department for Business, Innovation and Skills contacted London college St Patrick’s in August, stating that it had failed to meet the financial sustainability standards needed for it to be granted “designation” for its students to access Student Loans Company funding in 2014-15.

It is believed that BIS also told St Patrick’s that there was an alleged lack of transparency over its link with the London School of Business and Finance. The department is also understood to have raised concerns about the number of St Patrick’s students with SLC funding who were dropping out of courses.

St Patrick’s was given the opportunity to make representations in response to all the concerns raised by BIS. On 21 October the college – which is owned by a holding company registered in the Netherlands – received notice that it had been granted designation.

According to government figures, St Patrick’s was the biggest private college in terms of students studying sub-degree Higher National courses with SLC funding in 2012-13, followed by LSBF. St Patrick’s is a subsidiary of Global University Systems; LSBF describes itself as an affiliate of GUS.

In 2012-13, St Patrick’s went from having no students on HN courses with SLC loans to having more than 4,000. It received £11 million in fee payments from the SLC that year.

In a Public Accounts Committee hearing on public spending at private colleges last month, Margaret Hodge, committee chair, referred to St Patrick’s. “If I saw a college on a list going up from nought to 4,000, I would have thought, ‘What on earth are they doing?’ I would have asked some questions,” Ms Hodge told Martin Donnelly, the BIS permanent secretary, during the hearing.

As part of their applications for the designation process, private providers are now required to pass financial sustainability, governance and management checks, carried out by the Higher Education Funding Council for England.

According to BIS, the checks are intended to “ensure that providers with specifically designated courses are financially viable and sustainable, with a low risk of failure on financial grounds over the medium term”.

Mr Donnelly told the PAC hearing: “We were actually very concerned, including about the financial position of St Patrick’s. It was made clear that it had to inject further funding, which it did – a further £3 million – to get into a situation where we thought that it was in a reasonable position to meet the criteria that we set out.” He added that BIS was “looking again, very closely” at St Patrick’s following a request to move campuses.

A BIS spokesman said it could not comment on individual applications. He said the department had “toughened the criteria for designation in 2014-15 to ensure that all providers meet the highest quality expected of them”.

Asked how many private colleges were warned they could be refused designation before being granted SLC access, a department spokesman highlighted figures in the recent National Audit Office report on private colleges.

That states that at 6 October this year, of 128 applications for 2013-14 and 2014-15, there were 12 cases where Hefce identified “material issues” and the BIS initial view was “minded to reject”, but the final outcome was that the courses were designated.

St Patrick’s chose not to provide a comment for this article.

john.morgan@tesglobal.com