The Welsh government will in future provide public funding only to students at providers with charitable status, meaning an end to public support at for-profit colleges.
The move, announced by the Welsh government in an email on 21 January to private colleges with courses designated for public funding, appears to be aimed at stopping state money following Welsh students into for-profit institutions in England.
The policy change comes after criticism from the Public Accounts Committee at Westminster of the Department for Business, Innovation and Skills’ failure to control public funding at private colleges, also pointing to high dropout rates at some institutions.
Public funding at private colleges spiralled from £30 million in 2010 to a peak of £723.6 million in 2013, as former universities minister Lord Willetts undertook a policy to expand the private sector.
Some of the largest private colleges, such as St Patrick’s College and the London School of Business and Finance, are not charitable institutions.
It is unclear whether the Welsh government will make an exception to its rules for institutions with university status – but BPP University and the University of Law are not charities.
An email to institutions from Gregory Matthews of the Welsh government’s higher education division said: “With immediate effect, applications for the designation of courses will only be considered from providers that have charitable status. This does not affect courses with an existing designation or the support paid to students on those courses.”
A Welsh government spokeswoman said: “Alternative providers have a role to play in delivering higher education to students from Wales, and, in turn, we expect alternative providers to maintain high standards.
“Alternative providers effectively receive a subsidy via the tuition fee loans to the student. We consider that a provider in receipt of subsidy should demonstrably act for the public benefit and that an appropriate way of ensuring this is to require providers to have charitable status.”
Geoffrey Alderman, professor of history and politics at the private, charitable University of Buckingham, called the move “blatant prejudice against the for-profit sector”.
He said that Welsh students would be “prohibited from taking the same type of career-oriented courses that English students at for-profit institutions will be able to access”.