The payout to Tim Andradi, head of the LSC (which although privately funded is eligible to receive public money through student loans), and Kirtida Andradi will add to the debate over senior-level remuneration in public and private higher education institutions.

Accounts show that the shareholders of the umbrella company of which the LSC is a division received ?1.25 million in dividends in 2010, when Mr and Mrs Andradi, who were also founder shareholders of the company, owned 80 per cent of the shares.

During the year, the company posted a turnover of ?22.2 million and profits of ?904,722 before tax.

Shareholders also received a ?250,000 dividend in 2009, when the Andradis owned at least 72 per cent of the shares, but accounts do not show any other payouts since 2002, when the company was formed.

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The school offers BA, BSc, MSc, MBA and doctoral programmes from Cardiff Met and is reported to have around 4,000 students.

The two institutions have been collaborating since 2004.

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A further division of the umbrella company is the School of Business and Law, another London-based college offering business degrees, which are validated and franchised by the University of Gloucestershire.

Students on the two-year BA in business at the LSC have been eligible to receive taxpayer-funded student loans since November last year.

One student has applied for a loan, although because the applicant has not yet enrolled, Cardiff Met was "unable to say" whether the loan had been taken up.

Cardiff Met, which is currently under pressure from the Welsh government to merge with the University of Glamorgan and the University of Wales, Newport, considered setting up a full London campus in partnership with the LSC in October last year.

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The university has since said that it now has no intention of opening a campus in the UK capital with the LSC or any other partner.

Universities spent an average of ?208,037 on vice-chancellors' basic pay in 2010-11, while Carl Lygo, the head of for-profit business school BPP, received ?738,000 in 2009-10.

The LSC, Cardiff Met and the University of Gloucestershire declined to comment on the dividend.

david.matthews@tsleducation.com.