Fraudulent claims for student loans have quadrupled since 2019, with more than £90m requested through illicit applications, The i Paper can reveal.
Just under £71m of the £92m requested has been withheld by the Student Loans Company (SLC) since 2019 after the loan applications were found to be fraudulent.
However, the remaining £21m was paid out for claims that were later found to be illegal, according to a freedom of information request to the SLC, which administers student loans and grants for pupils at colleges and universities on behalf of the government.
The SLC said this “can” be recovered but could not confirm how much of the money had been recovered to date.
Fraudsters have been applying for funding without intending to complete a course, with the SLC warning some offences could be linked to organised crime after it identified suspicious applications involving fake documents and duplicated addresses.
The number of fraudulent applications for student loans increased year on year from 761 in 2019 to 3,191 in 2024, with a lull during the pandemic.
A total of 8,369 fraudulent applications have been made since 2019.
The average fraudulent claim amounted to £12,065 in 2024, including loans that were both withheld and paid out by the SLC.
Although the fraudulent amount claimed is only a fraction of the roughly £20bn per year issued to 1.5 million higher education students in England alone, experts stress that it is money coming “out of taxpayers’ pockets.”
Fraudulent claims can include applications that involve identity theft, false documentation on UK residency, incorrect information on marital status, and links to organised crime, among other things.
An increase in detected fraud can result from various factors including, for example, increased monitoring, according to the National Audit Office (NAO).
The SLC said it has strict controls in place to protect against fraud and abuse of the student finance system.
A spokesperson for the SLC explained it could recover fees directly from the higher education provider, while other grants and loans could be repaid through the income-contingent repayment system, which deducts debts from each claimants’ earnings automatically.
However, recovering lost funds could be more difficult in cases where false documents have been used to apply for loans and grants or offenders have moved abroad. It can also be difficult to recover if the money has been moved to other bank accounts.
Nick Hillman, director of the Higher Education Policy Institute (HEPI), said: “This is stellar and important work by The i Paper.
“Every penny that is paid out fraudulently comes out of taxpayers’ pockets and could have been put to better use. These new numbers, and the growth in suspected fraud, show why it is so important that the SLC is funded and staffed properly.
“It is a behemoth looking after £260bn of debt with 10 million customers and needs to be treated as such.”
Mr Hillman raised concerns that the SLC’s budget could be cut under Labour’s plans to reduce departments’ spending, weakening its ability to cope with student finance fraud.
He told The i Paper that he will be “calling for radical simplification of the multiple different graduate repayment schemes the SLC now has to oversee to make life simpler and better for graduates, the authorities and society” in a speech at the University of Bradford this week.
A DfE spokesperson said: “We will stop at nothing to protect public money; any misuse of student loans is an insult to hard-working students striving for better opportunities.
“We have already taken clear action to crack down on rogue operators to tackle fraud, and we’ll go further. Where misuse or fraud is found we have powers to claw back payments – and we won’t hesitate to use them.”
When a claimant is found to have made a fraudulent claim, they may be referred to the UK’s national fraud database, which impedes their ability to obtain credit and removes all student funding for a maximum of six years.
The SLC may also refer their case to law enforcement and prosecuting authorities.
An SLC spokesperson said: “We have controls in place to protect again fraud and abuse of the student finance system, and take robust action to do so, working closely with Government and the Office for Students.
“Significant measures exist to assess students’ eligibility for funding, which are administered along with partners across Government, to ensure students are eligible for funding before any loan payment is made.”
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