Such subcontractual partnerships – while presenting several benefits for students and higher education institutions (HEIs) alike – also present risks, according to an Office for Students (OfS) insights document published on September 3.

These include staff incentivising recruiting and retaining students over the quality of courses, students with insufficient English skills being told these are enough to join a course and not being given the extra support they might need and even reports of students paying for falsified English language tests.

A subcontractual partnership is when a lead provider – for example, a university – uses a third-party provider to deliver all or part of a course on its behalf. Students pay their fees to the lead provider, which keeps a percentage and passes the rest on to the delivery partner.

The report warned that “without appropriate oversight”, the “arms-length delivery” of such partnerships “presents significant risks to students, taxpayers and the higher education sector”.

It said these risks are worsened when:

• The lead provider has subcontractual arrangements with multiple delivery partners.

• Such arrangements involve a large number (for example, more than 1,000) of the lead provider’s students.

• The students involved are a significant proportion of those the lead provider registers.

Such agreements are a rapidly growing area in the sector, with students taught in the programs doubling since 2019/20 to over 138,000 in 2022-23 – representing over 5% of students in the sector, according to the report. And in some cases, lead providers now teach more students through subcontractual partnerships that directly on their own campuses.

But “there is evidence that [it] is not always true for students in such arrangement” that they are “treated fairly, receive a high quality education and get the outcomes they deserve”, it added.

In line with the growing number of students taught in subcontractual partnership courses, the UK‘s education watchdog the OfS is casting a beady eye over these deals. “This is to ensure that universities and colleges have robust governance and oversight of these arrangements, in the interests of ensuring positive outcomes for students and taxpayers, and the reputation of the higher education sector,” its report said.

“We invite leaders in universities and colleges that already have subcontractual arrangements, or are considering entering them, to consider the suggestions in this brief on how to ensure effective governance and oversight. While universities and colleges must contact us if any material concerns arise with a subcontractual partnership, we can also advise at an earlier stage, including before an arrangement is made.”

There are also serious risks to public money where these arrangements are not managed properly

David Smy, OfS

It continued: “Some of the more striking examples we have seen of such arrangements leading to strong positive outcomes include collaborations with performing arts and media colleges, and further education and sixth form colleges.”

“From our analysis…we can see that many benefits can be achieved through subcontractual partnerships, for both students and higher education providers…But partnerships need robust management and oversight if they are to achieve these benefits, and deliver for students and taxpayers,” said David Smy, the OfS’s deputy director for enabling regulation at the OfS.

“In these financially challenging times for higher education providers, it’s more important than ever that they recognise that business models that rely heavily on subcontractual partnerships carry additional risks, and these risks must be effectively managed.”

He continued: “There are also serious risks to public money where these arrangements are not managed properly. This can include universities and colleges receiving public funding for students who may not be genuinely studying on the course their tuition fees are funding, and students who may be receiving other payments they’re not entitled to. We continue to work closely with the Department for Education and the Student Loans Company to ensure public funding is protected.  

‘We hope this Insight brief will be a useful resource for universities and colleges that are, or are contemplating, working through subcontractual partnerships, and a reminder of the importance of good management and effective governance. Lead universities should seriously consider whether they should offer courses in this way if they cannot manage partners and public money effectively while ensuring that courses are delivering positive outcomes for students.”