Loughborough College of Art and Design has launched an investigation following concern that improper bids may have been made for European cash.
The Higher Education Funding Council for England is monitoring the inquiry, which is understood to centre on allegations that the college was wrongly named as backer for a bid for European Social Fund money.
Leicestershire fraud squad has been informed.
The inquiry comes as West Midlands fraud squad continues to probe allegations of fraudulent ESF claims at Hereward College, Coventry, where a new principal, Cath Cole, was appointed after the early retirement of former chief executive Rees Williams on health grounds last year.
An HEFCE spokesman said of the Loughborough investigation: "The council is in discussion with the college and with the Department for Education and Employment and will consider any general lessons for the sector." College managers declined to comment.