Universities that offer students flexible learning routes are being unfairly penalised, according to vice-chancellors.
Students who take time out, switch between full-time and part-time study, drop modules or delay taking final assessments, cost their universities dear. Under funding-council rules, universities receive less cash to teach these students.
Geoffrey Copland, head of the Coalition of Modern Universities and vice-chancellor of the University of Westminster, said: "We have well-established learning programmes based on modular structures with credit accumulation. We need the funding and performance measures to reflect that flexibility to support the student and the institution."
He said: "As more students seek to enter higher education and combine study, work and family, our funding must be responsive."
Deian Hopkin, vice-chancellor of South Bank University, said: "We encourage modularity and we encourage flexibility and then we find out that we do not get funding for it and we are penalised. I don't believe we will get the widening-participation agenda off the ground unless we address this."
The funding council is in discussions with Birkbeck College, London, about what completion means for part-time continuing education students. It is threatening to penalise the college after it said Birkbeck had been teaching students that it did not recognise as having completed their courses.