The franchise cliff edge

This blog was kindly authored by Dr David O’Connor, Founder at Blairgowrie HE Advisory.

There are 167,440 students in subcontracted higher education arrangements in England in 2024-25. That is a 56 per cent increase since 2021-22. Of those, 113,000 are taught by organisations that are not registered with the Office for Students (OfS). The data needed to understand what this means for institutional finances, student outcomes, and lender exposure is all public. The problem is that it sits in separate places, published by separate bodies for separate purposes, and is almost always read in isolation. This piece is about what happens when you read it together.

Three cliff edges

Three regulatory events will arrive over the next two years. None of the institutions most exposed has publicly stated what it will do.

The first is already in force. Condition E10 came into effect on 31 March 2026. It compels universities to terminate arrangements where minimum standards are not met, and requires disclosure of fee-retention arrangements in future accounts.

The second is the mandatory registration deadline. Providers teaching more than 500 students must register with the OfS by 30 June 2026. Those that do not are de-designated from 2028-29. For universities that have built their financial model on franchise income, that is not a compliance task, it is an existential question.

The third is enforcement. The OfS fined Leeds Trinity £115,000 in May 2025 and imposed operational restrictions. The precedent is set.

The dependency problem

The University of Suffolk subcontracted out 77 per cent of its students in 2024-25. Canterbury Christ Church University was at 74 per cent. Bath Spa University at 73 per cent. Leeds Trinity University at 69 per cent. For these institutions, franchise income is not a supplement to the operating model. It is the operating model.

The dominant partner in several of these arrangements is Global Banking School (GBS) which is also subject to an OfS investigation that opened in January 2026 regarding its partnership with Oxford Brookes University, examining compliance with conditions on course quality, management and governance. .An estimated 38,740 students are subcontracted in from five universities, with an estimated annual revenue of £300 million. The sole person of significant control is a UAE resident. GBS has no degree-awarding powers.

The Bath Spa audited accounts tell the rest of the story. Bath Spa’s going concern note states that partnership income is “highly material.” The vice-chancellor’s foreword refers to reducing reliance on private provider franchise student numbers. Both sentences are in the same document. Meanwhile, lenders including Lloyds, Barclays, Santander, and eight US private placement holders carry exposure to institutions whose revenue base depends on arrangements that the regulatory timetable is about to disrupt.

Who these students are

At GBS, 76.6 per cent of students come from the two most deprived Index of Multiple Deprivation (IMD) quintiles. The sector average is 37.8 per cent. Progression to graduate-level employment is 41.8 per cent, against a benchmark of 54.2 per cent. On current student numbers, that gap generates approximately 4,800 additional non-progressors annually. Student Loans Company data shows £2.0 billion in maintenance and tuition fee loans disbursed to students at six franchise-heavy institutions in 2023-24, up from £450 million five years earlier.

These are students who enrolled on the promise of a university degree. They are predominantly from low-income backgrounds. They carry real debt. And the B3 outcome data shows they are systematically less likely to progress to graduate employment than students at their awarding institution’s own campus.

What should change

Three things would make the regulatory transition less damaging.

First, the OfS should require lead providers to publish institution-level student outcome data disaggregated by delivery partner. The data exists. It is not published in a form that prospective students, governors, or lenders can use.

Second, the Student Loans Company and the OfS should be directed to cross-reference loan disbursements against delivery location. The total public loan value flowing to non-continuing students in subcontracted provision is currently unknowable. That is a gap in public accountability, not a gap in available data.

Third, the Department for Education should set a clear expectation on transition planning. Universities with dependency ratios above 50 per cent face an acute income shock if their delivery partners fail to register. Those institutions need to publish credible transition plans before 2028, not after.

The regulatory timetable is public. The audited accounts are public. The cliff edge has a date. What is missing is any sign that the institutions walking towards it have a plan for when they reach it.