Office for Students tightens scrutiny of English degree quality amid franchise course concerns

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Office tightens degree quality

Highlights

The Office for Students is consulting on tougher rules that would automatically cut UK student recruitment by 10 per cent for universities failing enhanced teaching assessments.
Franchise and subcontracted courses face heightened scrutiny due to poorer student outcomes and fraud risks, with nearly half of student loan fraud occurring in franchise providers.
About four in ten English universities are expected to record a deficit in 2025-26 as international student income weakens, prompting job and course cuts.

Proposed sanctions and franchise oversight

As reported by the Financial Times, the Office for Students is consulting on a tougher regulatory regime that would penalise universities whose courses fail strengthened teaching assessments. Under the proposals, institutions that do not meet the standard would see their ability to recruit UK students reduced by 10 per cent automatically and could ultimately lose degree-awarding powers if they do not improve.

Ruth Hannant and Polly Payne, the joint chief executives of the regulator, say the changes are intended to ensure degrees deliver lasting value after a decade of higher education expansion. The revised approach to the Teaching Excellence Framework would combine judgments from academics and students with data on course completion and whether graduates move into good jobs.

Payne says some students are being mis-sold courses that do not benefit them, while Hannant says weak provision in parts of the sector is damaging the reputation of English universities more broadly. Payne also points to franchise courses as a particular concern, saying outcomes are worse than for students studying at the sponsoring institutions and that tougher inspections should curb poor-quality provision.

The regulator is also focusing on fraud risks in the subcontracted model. Payne says it is "pretty stark" that half of student loan fraud is in franchise providers, while stressing she is not opposed to a particular ownership model if quality standards are met.

Financial strain and sector implications

Even as the regulator describes English universities as world class, the intervention comes as the sector faces mounting financial pressure. About four in ten universities are expected to record a deficit in 2025-26, with more institutions cutting jobs and courses as income from international students weakens.

Hannant says the Office for Students is worried about universities' financial health but does not expect significant numbers of institutions to fail as they focus on cost reduction. She argues that universities need to find other sources of financial sustainability, but any expansion strategy, including franchising, must continue to deliver quality for students.

The regulator is not seeking to set entry standards or determine how many people should go to university, according to Payne and Hannant. Payne says admitting students outside the traditional A-level route can be positive if universities ensure those students can succeed and receive adequate support.

Universities UK says strong education quality is essential to preserving the sector's reputation and that it is appropriate for the regulator to have tools to hold institutions to account. The group adds that most provision meets or exceeds regulatory expectations, while acknowledging that universities also have a responsibility to respond to their financial difficulties.

In our earlier article on sovereign borrowing risks in a higher-rate environment, we examined how persistent geopolitical shocks and elevated fiscal spending can squeeze government budgets and increase refinancing strain. We noted that emerging and frontier markets are especially exposed because debt-servicing costs are high relative to narrower revenue bases, while energy and food price spikes can keep inflation elevated and further pressure credit outlooks.

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