Private colleges under scrutiny over student loan 'fraud'

Private providers of higher education are facing scrutiny over fresh allegations of fraud in England’s student loans system. 

The BBC’s Panorama programme secretly filmed Imran Saeed Sheikh, an education agent who runs a chain of barber shops in east London, offering to place an undercover student on a two-year Higher National Diploma business course at a college in the capital in return for a £200 fee. 

This would enable the student to receive student loan payments. 

When the student said that they had left school at 16 and therefore did not meet the course’s entry requirements, Mr Sheikh and an assistant supplied them with a backdated certificate for a course they had not studied, equivalent to A levels, Panorama said. 

This was sufficient for the student to be enrolled on the course and, within days, they received the first £3,600 instalment of their loan.  

Mr Sheikh added that, in return for a £1,500 cut of the student’s loan, he could “take care of your attendance for the whole year, get your eight assignments done”. 

"Come at around 10am, take two hours off from your job, mark your attendance, tick mark your name, leave after two hours," he told the student, according to the BBC. 

"You just sit like a dummy and keep nodding along. When the college gives you assignments, you don't have to do them. These go directly to our agent in Pakistan. He gets people to do them."

Mr Sheikh did not respond when approached by reporters for comment, the BBC said. 

About £400 million is paid to 112 private colleges in England every year through the student loan system. The government is hoping to expand the sector following the passing of the Higher Education and Research Act earlier this year. 

Panorama also filmed a second recruitment agent, Charles Logan, telling an undercover student that enrolling on a three-year business management degree at another college, GSM London, would not interfere with their full-time job.

“There's a guy who we see here who has never been to a class, never done an assignment in his life, but used the money to open two restaurants and he graduated with honours with a law degree last year,” Mr Logan said.

After the student was admitted, Mr Logan put the student in touch with someone who could write his assignments for him – essays that, once purchased, got good marks from GSM.

Mr Logan’s lawyer told the BBC that he “emphatically denies acting fraudulently, either for profit or to assist students in fraudulently claiming student finance”.

Plymouth University, which validates and awards degrees studied at GSM, said that it had launched an investigation.

Following the broadcast, GSM said that it had terminated its contracted with Mr Logan’s company, Future Leaders’ Academy Limited, with immediate effect. The college also said that it had launched an independent review of its admissions and assessment practices, to be led by law firm Mishcon de Reya and admissions expert Janet Graham.

“Charles Logan’s actions are totally unacceptable and are not reflective of the high standards that GSM London, our staff or our students uphold,” said Amanda Blackmore, GSM’s president and chief executive. “FLA has let us down and I am clear that our independent review will identify and address any gaps in our internal process.”

Meg Hillier, chair of the House of Commons Public Accounts Committee, told the BBC that the expansion of the private college sector had not been accompanied by the creation of an effective regulatory system by the government.

“It's got to crack down on what's happened now, really investigate it,” she said. “But it also has got to have a system that stops these chancers piling in and making money from the taxpayer.”

chris.havergal@timeshighereducation.com