The government has ordered a crackdown on fraudulent grant claims amid concerns that a number of students are cheating the government out of thousands of pounds in grants every year. Universities Secretary John Denham has asked the Student Loans Company (SLC) to carry out spot checks in 11 areas of England, in order to identify the “extent of fraud in the grant system.”
Currently, university students under the age of 25 are assessed on their family’s income at their home address and students with an annual family income of less than £25,000 per year can claim grants of up to £2,825. A spokesman for the SLC said: “the amount of financial support a student can receive is largely dependant upon their household income and the spot checks seek to confirm that the information supplied is correct.” The SLC are working together with the Department for Innovation, Universities and Skill (Duis) in order to establish the extent of income-related fraud. They are hoping that the spot checks will establish whether households are either under- or over-declaring earnings, affecting the amount of financial help the SLC offers to students. Denham added that applicants included in these spot checks have “nothing to fear” and that “no action will be taken if genuine errors are made” in the application process.
Duis recently revealed to government that there is a £200m shortfall in funding of the students grants due to a larger number qualifying for means-tested funds last year, prompting the government to reduce the upper limit for receiving financial help from a family with an income of £60,000 to £52,000, effective next year. This means that about 10% of the total student intake in the coming year will be denied grants. The fact that more people qualified for grants could signify that more people from poorer backgrounds are attending university, but as the SLC/Duis estimated that only a third of students would qualify, when in fact 40% did, they are concerned that some may be “fiddling the system.”
The SLC has also identified a loophole in the system, where students of wealthy parents, domiciled outside of the UK, could qualify for grants. As the amount of financial help given by the SLC is calculated on the income of the student’s domestic address, tracking this information abroad is a very difficult and lengthy process. A spokesman for the SLC said that the loophole was “possible” but again, did not believe misuse to be widespread.
Wes Streeting, President of the National Union of Students said the loophole was “shocking” but insisted it did not believe the loan company’s review would identify mass fraud amongst students. “We need to look very carefully at the issues of non-dom (non-domiciled) entitlement to make sure British taxpayers money [is] well spent.”