The UK government has been accused of ¡°bending over backwards¡± to support England¡¯s biggest for-profit college ¨C by letting it continue to access public funding despite officials knowing about its serious financial problems ¨C while ¡°refusing to back¡± public universities.

GSM London¡¯s recently published accounts reveal that it made a net loss of ?9.9?million last year, and that ?26?million of its debt has been waived as part of a turnaround plan agreed with its private equity owners.

The accounts, overdue since June but finally published on 14?November, also say that the turnaround plans are ¡°not without risk¡±. If events were to ¡°crystallise in a materially negative manner¡­then the group may need to secure further funding¡±, the accounts add, and ¡°if further funding was not arranged then there would be a significant doubt over the group¡¯s ability to continue as a going concern¡±.

However, the Department for Education has approved the turnaround plan and allowed GSM to access public funding for students this year.

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GSM has the highest number of students claiming Student Loans Company funding of any alternative provider in England, with 4,587 students receiving a total of ?17?million in tuition fee loans in 2017-18, according to SLC figures.

DfE officials have been in talks with GSM ¨C which featured in a 2017 BBC Panorama investigation into external recruitment agents used by some for-profit colleges ¨C about its financial worries over the course of the year.

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Financial problems?at?GSM?followed a drop in the number of students being retained to the end of their courses, Times Higher Education understands.

The Sunday Telegraph that the DfE had been ¡°in talks¡± with GSM and that ¡°accountants from BDO were placed on red alert amid fears GSM¡­could collapse into administration¡±.

GSM is owned by Clipper Group, which is in turn majority-owned by private equity firm Sovereign Capital. The owners were looking to sell GSM earlier in the year, É«ºÐÖ±²¥ understands, but subsequently agreed to stay in charge.

GSM¡¯s accounts say that Sovereign has now ¡°provided further equity to fully fund¡± the groups headed by Clipper, including GSM¡¯s ¡°turnaround plans¡±, a deal completed on 8?November.

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This deal ¡°includes creditors waiving in excess of ?26?million of long-term loans¡±.

The accounts add: ¡°The Department for Education has confirmed its approval of the changes and has designated GSM London Limited [for students to access SLC funding] for [the] 2018-19 academic year on 6?November 2018, based on the ongoing structure and the turnaround plan presented to the DfE.

¡°The DfE has identified that it will monitor the delivery of the group¡¯s turnaround as an ongoing condition of the designation.¡±

Sam Gyimah, the universities minister, recently said that ¡°we do not see it as the government¡¯s role to bail universities out when they make reckless financial decisions¡±.

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But Matt Waddup, the University and College Union head of policy and campaigns, said: ¡°This looks like a government bending over backwards to help the profiteers while refusing to back our public universities.¡±

A GSM spokeswoman said that the refinancing deal ¡°leaves the group free of bank and investor debt¡±.

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¡°Our focus is ensuring that all our students continue to access a quality education, and this investment will provide GSM London with the support we need to successfully implement our detailed five-year plan for the college,¡± she added.

john.morgan@timeshighereducation.com