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The education secretary has pulled student loan funding from the private Oxford Business College over concerns about admissions practices.
Bridget Phillipson said the "management of recruitment and attendance" at Oxford Business College, which is not a university itself but offers courses from some English universities, had "fallen well short".
She said she wanted to "stamp out any abuse of the student support system", amid allegations that people are claiming millions of pounds in student loans without planning to study.
Oxford Business College said there had been "no findings of malfeasance" and it would challenge the decision, which it said was "unlawful".
In a written ministerial statement, Phillipson said she became aware last year of "credible concerns about the recruitment and attendance of students" at the college and commissioned an investigation by the Government Internal Audit Agency.
She wrote: "It is clear to me that the management of recruitment and attendance at the college has fallen well short of the standards I am entitled to expect; this is unfair on those students who have genuinely wished to study.
"In particular, the investigation has not been able to provide me with assurance that students' prior attainment, including their competence in the English language, has been adequately assessed, or that their attendance on their courses has been adequately monitored."
She said the college had been told new students on its courses would not be eligible for student support with immediate effect.
Oxford Business College said: "The Department for Education's lengthy investigation into Oxford Business College (OBC) concluded with no findings of malfeasance.
"Despite this clear outcome, the DfE has indicated that courses will be de-designated as of September 2025 – a decision OBC firmly believes is unlawful and will challenge through judicial review.
"Safeguarding our students' interests remains our absolute priority."
The ministerial statement follows concerns about the "franchised" provision of higher education courses.
Under these arrangements, universities that are registered with the Office for Students, England's universities regulator, allow smaller institutions, which do not have to be registered, to teach some of their courses.
When students at these colleges take out student loans to cover tuition fees, they are paid directly to the registered university that developed their course. A percentage is then passed on to the smaller institution, which delivers the teaching.
They can also apply for maintenance loans to help with living costs, which are paid directly into their bank accounts.
The decision to pull student support from Oxford Business College courses means that new students will not be able to apply for student loans to study there, and follows allegations that millions of pounds in student loans are being claimed by people who have no plans to study.
Last month, the Sunday Times said it found evidence of some individuals enrolling on degree courses at small colleges just to access loans, with no intention of paying them back.
The newspaper said most of the students under scrutiny are believed to be at franchised universities.
It claimed there is a concern about the potential "organised recruitment" of Romanian nationals in particular to enrol on courses.
The education secretary called it "one of the biggest financial scandals in the history of our universities sector" and said she had asked counter-fraud experts to lead an investigation.
Oxford Business College advertises courses from the University of West London, Buckinghamshire New University and New College Durham on its website, all of which are registered with the Office for Students, England's universities regulator.
Phillipson said it provided courses from five registered institutions altogether, and that "a number of the College's partners have already terminated their agreements with it or have imposed additional controls".
"Genuine" students at Oxford Business College will be able to transfer to new courses until the end of the academic year and keep their maintenance and fee support if they "remain engaged with their studies", she said.
"These decisions reflect my determination to stamp out any abuse of the student support system. I will not hesitate to do the same again if circumstances justify it," she added.
