Thousands of foreign students who attended British universities are failing to repay taxpayer-backed loans worth £75 million – leaving a giant hole in Government finances.
Of 8,700 graduates who have moved abroad, only 800 are currently making repayments. The whereabouts of a further 9,900 EU students are unknown.
The findings are set to fuel fresh concerns that many European students, who can claim subsidised loans to cover the cost of tuition fees, could effectively gain free degrees.
The news follows the release of official figures, which also show how total outstanding student debt owed by British and EU graduates has ballooned to £40.2 billion, up from less than £30 billion two years ago.
That includes £349 million borrowed by European students – more than double the total in 2009/10. The figure will spiral even more sharply from September, when the upper limit for tuition fees is raised from just over £3,000 to £9,000 a year.
Students from EU countries have been eligible for special low-interest loans from British taxpayers to cover tuition fees since 2006, but cannot claim maintenance loans.
British-based graduates pay back their student loans automatically through the tax system once their earnings exceed £15,000. However, there is no equivalent system for those who move abroad. They are required to set up direct debits, or ‘remember to pay online’. Incredibly, officials have only taken legal action to recover funds from nine EU students since 2009.
Statistics show that almost 30,000 EU students became liable to start repaying loans over the past five years. On average, they owe just over £6,000 each.
Some 2,600 have already fully repaid their loans, while an additional 8,000 have remained in Britain and started to pay theirs back through the tax system. However, of the 8,700 known to be living abroad, 2,400 have been placed ‘in arrears’ after failing to disclose details of their financial arrangements, while 400 have defaulted on repayments.
Some 5,100 are not earning enough to repay, meaning just 800 of them are paying off their loans.
Moreover, 9,900 EU students are classed as ‘not currently repaying – further information being sought’. Those classed as ‘in arrears’ or ‘not currently repaying’ owe approximately £75 million, but the total amount owed is considerably more. Tens of thousands more students from the EU are currently at university here and have borrowed £239 million to cover tuition fees.