Taking the credit: the rise and rise of private SLC income

Private colleges providing degrees in subjects ranging from law and finance to bible studies and acupuncture have received more than £25 million via taxpayer-subsidised student loans since top-up fees were introduced, Times Higher Education has learned.

The data from the Student Loans Company show the extent to which students at independent colleges, which are not subject to a recruitment cap, have already accessed fee loans ahead of steps by the coalition government to further open up the system.

As reported in THE last month, about 60 private providers have access to the public loans system, including alternative therapy specialists, religious-based institutions, a training school for nannies and for-profit providers such as BPP University College.

A Freedom of Information request has now revealed that in total, undergraduates at the institutions - classed as those without public funding council grants - borrowed £9 million in state loans to help pay tuition fees in 2009-10.

Although this constituted less than 0.5 per cent of total fee loans, it represented an increase of £2 million on 2008-09 and was almost three times as much as was borrowed in 2006-07, the year top-up fees were introduced - although only one cohort of students borrowed money in that first year.

The institutions that received the most from the SLC last year were: the Guildford-based Academy of Contemporary Music (£2 million); the Brighton Institute of Modern Music (£1.6 million); and the Greenwich School of Management (£823,000).

Others in receipt of substantial sums included Moorlands College, a Christchurch-based Christian institution (£337,000); Mattersey Hall Assemblies of God Bible College (£306,000); and better-known institutions such as the University of Buckingham (£376,000).

Students at the College of Traditional Acupuncture in Hatton, Warwickshire borrowed £166,000 for fees, while those at Bath-based Norland College - described as "the world's most upper-crust nursery training school" - received £90,000 in tuition fee loans.

Eligible students attending the private institutions were also able to draw loans to support their living costs.

A total of £13.1 million was borrowed for maintenance in 2009-10, up from £10.8 million in 2008-09.

Students are eligible for loans if their courses are validated by recognised UK awarding bodies, typically state-funded universities, and have been "designated" as suitable by the Department for Business, Innovation and Skills.

Unlike Buckingham - the only independent higher education provider with full university status in the UK - and newer institutions such as BPP University College, most of those eligible for loans lack degree-awarding powers.

Realistic and competitive

Earlier this month, David Willetts, the universities and science minister, announced that students on "designated courses" taught by private providers in 2012-13 will be able to borrow up to £6,000 a year in tuition fee loans.

At the moment, they can borrow only up to the current fee cap - £3,290 in 2010-11.

Although the new cap is not as high as the £9,000 limit for publicly funded universities, the heads of private institutions have welcomed the increase as it will help them to provide courses at realistic but competitive rates.

One provider, the London-based Institute of Contemporary Music Performance, immediately reacted to Mr Willetts' announcement by saying that it would charge £5,750 in 2012-13 for its bachelor's in music degree, which is validated by the University of East London.

Last week, the Office for Fair Access revealed that 122 of the 123 public higher education institutions in England offering undergraduate degree courses had submitted draft access agreements indicating they plan to charge fees in excess of £6,000 a year.

Paul Kirkham, managing director of the Institute of Contemporary Music Performance, said the government's decision to give private institutions greater access to student loans represented the "first move towards a level playing field".

He also dismissed claims that private providers in receipt of loans were not properly regulated.

The increase in the borrowing cap announced by Mr Willetts is an "interim" measure. After 2012-13, the government is aiming to subject private providers to the same constraints on student numbers as public institutions to limit the cost to the Treasury of student loans.

However, Mr Kirkham said he did not mind this, provided it was a short-term measure.

"You can't have that level of macro control if you are pushing for a free market system, but we do understand that in the interim there needs to be some level of cap," he said.

simon.baker@tsleducation.com.