Further education colleges will deliver most of the extra 10,000 foundation degree places next year, but some could get little cash for doing so, The Times Higher has learnt.
About two-thirds of the extra places for 2004-05 will be delivered by further education colleges and the rest by higher education institutions.
The total cash available for the extra places is £42 million.
Nearly 160 further education colleges were eligible to bid for extra places. These are funded by the Higher Education Funding Council for England, but it is not known how many submitted bids or how many were successful.
A further 140 colleges will receive funding for their higher education courses, including foundation degrees, through partner institutions that make the bids to Hefce. The higher education institutions making bids tend to take a cut of any cash they get from the funding council before giving partner colleges their share.
The Association of Colleges wants more colleges to receive direct funding, giving them greater control over their higher education work. The AoC said that higher education institutions often top-sliced up to half of the money and dictated what kind of foundation degrees were developed.
Susan Hayday, the AoC's higher education spokeswoman, said: "It is absolutely clear to us that it is crucial for colleges to have a direct funding stream so that they can independently manage their higher education strategy. Some colleges have reported to us that under those circumstances they are able to have a more grown-up relationship with higher education institutions, because they are no longer reduced to being the junior partner."
Further education leaders are also unhappy with the validation arrangements for foundation degrees, which leave most colleges with little choice but to go along with the plans of their local university.
Foundation Degree Forward was set up by the government to promote foundation degrees and to establish a national validation service. But it proposes setting up a national network of validating universities rather than a single national validating body.
Ms Hayday said: "This can be a problem because in many cases universities are only willing to validate foundation degrees in areas where they have some expertise. Yet colleges may have developed their own expertise, particularly through links with employers. But where universities control the purse strings, they are often also in control of which courses are offered."