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Only £280,000 clawed back from £2.45m wrongly awarded to foreign students

Published 22/08/2015

£2.45 million was wrongly allocated to foreign students
£2.45 million was wrongly allocated to foreign students

Millions of pounds of taxpayers' money has still not been recovered from foreign students who were wrongly handed loans and grants because of inadequate checks

Two years after the problem was uncovered, only around a 10th - less than £280,000 of £2.45 million wrongly handed out to hundreds of individuals - has been clawed back.

The Student Loans Company (SLC), from which the Press Association obtained the latest figures, said it was still "actively tracking down" the funds and had not written off any debt.

The Government has been severely criticised by public spending watchdogs for ignoring warnings that a rapid expansion in higher education colleges could lead to financial abuse.

Over three years from 2010, loans and grants paid to students at "alternative providers" - which get no direct state funding - rocketed from £50 million to £675 million.

But until September 2013, SLC relied solely on the word of students that they had lived in the UK for the three years needed to qualify for maintenance support.

The Department for Business, Innovation and Skills suspended payments and ordered 23 colleges to halt recruitment amid fears the system was being abused.

An emergency review of more than 11,000 applications found half could or would not provide it and that 992 had been given the money before the stricter checks were imposed.

Of the £5.4m thought to have been wrongly paid, £1.8m has since been deemed to be legitimate claims - the number of ineligible students falling from 992 to 766, SLC said.

Around £1.11m of £1.15 million in tuition fee loans has been clawed back directly from 136 alternative colleges, which receive indirect public funding through the payments.

But of the £2.45m in the hands of individual students - in 23 countries including a large number from Romania - SLC said it had so far been able to recover £278,427.

Some 98 have handed back the full amount of their grants and just eight have repaid all the money loaned to them.

No deadline has been set for recouping the money.

"We work with each individual customer to ascertain their personal circumstances and agree a repayment plan specific to them, ensuring that all repayments plans are affordable and sustainable for the customer and will not cause them financial hardship," an SLC spokesman said.

A push to increase diversity in higher education - including increasing the maximum tuition loan fee available from £3,375 to £6,000 - were announced in 2011 and helped fuel a rapid expansion of places concentrated across a relatively small number of colleges.

It was supposed to benefit English students but claims for support from other EU nationals soared from 7,000 in 2010/11 to 53,000 in 2013/14.

"SLC has put special recovery arrangements in place to actively recoup repayment from individuals ineligible for student finance," a spokeswoman said.

"Collecting repayments is one of SLC's key business priorities and we are focused on collecting every pound of taxpayer money that is owed."

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