Last year foreign students were accidentally paid £5.4 million to fund student loans, as they were not forced to show evidence of living in England.
The Department for Business, Innovation and Skills have paused payments until further inquiries take place and ordered 23 colleges in England to pause payments until then.
Around 11,000 EU students applied for financial aid to study in England. Once asked to show proof of residence in England, many did not reply. When BIS started investigating, 992 applicants had already been paid their loans.
The Student Loans Company, which is a government financial support system, was reportedly not working efficiently to check students were attending their courses and failed to verify whether they were living in the UK for three years prior to the start of their course.
Before September 2014, the SLC relied solely on the word of the applicant to process payments.
“The Student Loans Company has implemented an enhanced evidence requirement that ensures that only eligible applicants receive student funding,” said a SLC spokesperson.
The student loans company has now been able to retrieve £1.4 million. They believe they will be able to get back the remainder by February 2015 by instigating new control limits.
“The process to recover these funds is ongoing,” the spokesperson said. “The figure in the report has substantially reduced and is now less than £4 million. This figure will reduce further in the coming months and we expect to have recovered over-payments from these alternative providers by February 2015.”