UNIVERSITIES minister David Willetts admitted yesterday that a government agency threatened more than 300,000 cash-strapped graduates with fake legal letters.

The Tory confirmed that the Student Loans Company had tried to frighten 309,000 graduates into coughing-up tuition fee and living costs loans since 2005. 

The SLC sent letters to the graduates that claimed to be from the Smith Lawson & Company debt collection agency. 

Mr Willetts explained it was viewed as a “low-cost alternative” to setting real debt collectors on graduates.

His written statement to Parliament revealed how the SLC only stopped sending the letters on June 27 when Wonga were publicly shamed for sending fake legal letters to 45,000 lenders. 

National Union of Students welfare officer Colum McGuire said he was glad the scaremongering tactics had stopped.

But he added: “The fact that many thousands of former students have received potentially misleading letters from SLC is deeply troubling.”

And despite the practice continuing on his watch, the Tory refused to take any responsibility for the scandal.

“The practice was approved in late 2004 by the company’s board of that time and ministers in the previous administration,” his statement said.

Charles Clarke was Labour’s education and skills secretary at the time. 

The statement also revealed that Business Secretary Vince Cable received but rejected a resignation offer from SLC chairman Christian Brodie as he’d only been in post since February despite the scandal being a decade old.

But students at Sussex University — where Mr Brodie is council chairman — are in revolt about his role. 

He had to abandon plans to oversee graduation ceremonies this week following a barrage of complaints from students facing a year in debt.

Students’ union officer Michael Segalov told the Star: “There was lots of talk about direction action on the day of graduations if he had overseen them.”

A spokeswoman for the Financial Conduct Authority, which agreed a £2.6 million compensation scheme for Wonga victims, said it was “aware of these reports” and asked victims to come forward with information.