Image copyright Thinkstock Image caption About 140 "alternative providers" offer HE courses, but MPs are worried they have not been regulated properly

The government ignored "repeated warnings" about wasting money on alternative higher education providers, according to a report by MPs.

The Public Accounts Committee says the sector was expanded "without sufficient regulation".

The PAC says that almost £4m went to ineligible foreign students.

The Department for Business, Innovation and Skills (BIS) says alternative providers play a "significant role in widening access to education".

Approximately 140 institutions offering higher education are termed "alternative providers".

They include, for example, BPP University which is a highly regarded college offering routes into careers in accountancy and law, and the College of Integrated Chinese Medicine, which teaches a bachelor's degree in acupuncture.

Student loans

Some are private companies run for profit, others have charitable status.

They do not receive government grants directly, but can access public funding through student loans, which are used to pay their fees.

The PAC describes the growth in the sector as "substantial and rapid".

Between 2010 and 2014 the number of students claiming support for courses at alternative providers rose from 7,000 to 53,000.

Over the same period, the total amount of public money paid to students at alternative providers, through tuition-fee loans and maintenance loans and grants, rose from about £50m to £675m.

Of the publicly funded students attending these colleges, 40% are from other EU countries, compared with 6% in the rest of the higher education sector.

'Lax approach'

Margaret Hodge, who chairs the PAC, said the department had "ignored repeated warnings about the potential waste and abuse of public money intended to support legitimate students and institutions" since it had started the expansion in the sector.

"The department pressed ahead with the expansion of the alternative provider sector without sufficient regulation in place to protect public money," she said.

Image caption Margaret Hodge, who chairs the PAC, says there was not "sufficient regulation in place to protect public money"

"The department was explicitly warned by the Higher Education Funding Council for England and the Universities and College Union about these risks, but chose to disregard them both before and after implementation.

"As a result of its lax approach, the department allowed £3.84m of public money to be given to ineligible EU students in the form of student loans and grants, where EU students had either chosen not to or had been unable to prove that they met eligibility criteria on residency."

Mrs Hodge added that the department had been "unable to quantify" the money lost when it funded students who had failed to attend or complete courses, and that it had been "slow to react to obvious red flags".

She also said the committee had been given evidence suggesting that proficiency in English language had not been tested.

'Continuous improvements'

A BIS representative insisted alternative providers widened access to higher education for British students and boosted exports.

"Our priority is to protect the interest of students and safeguard taxpayer's money," the spokesman said.

"We have made continuous improvements to the management of alternative providers since 2012.

"We recently introduced reforms to drive up quality, aimed at the small number of providers who are not currently meeting our high standards.

"These include a fit-and-proper persons test for directors and a requirement to register students for the course before they can access funding.

"We are also shortly consulting on how to ensure that all students on funded courses have the right English language skills to achieve their qualifications", he added.

The UCU lecturers union said the Public Accounts Committee had clearly been "as shocked as we were over the government's refusal to heed our warnings".

The union's general secretary, Sally Hunt, said the government had "serious questions to answer about why it ignored these repeated warnings and why it allowed such rapid expansion to go unchecked".

Prof Aldwyn Cooper, who chairs the Independent Universities Group, which represents a group of alternative HE providers, said it was important to remember many offered "a first rate higher education".

"The members of the Independent Universities Group have undergone stringent quality reviews in order to gain their own degree-awarding powers and provide excellent student outcomes," he said.

"These institutions offer first rate value for money, employability and student experience.

"They receive no direct funding from government and are careful to ensure that they are fully compliant with the expectations of the department and the Student Loans Company.

"Poor quality should not be tolerated - it drains the public purse and risks tarnishing the UK higher education brand."

Liam Byrne, the shadow universities minister, said the PAC's findings were "yet more evidence of the mess the government has made of the student finances".

"These findings show the staggering way the Tory-led government has wasted hundreds of millions of pounds of taxpayers' money, handed over to private providers without proper safeguards or controls," he said.

"Ministers completely ignored and disregarded repeated warnings on the potential for waste and abuse, and they now have serious questions to answer on the way funding for private providers has been so badly mismanaged at the taxpayer's expense."