Increased Tuition Fees mean Increased Losses for the Student Loans Company

The conservative led coalition government’s plans to raise tuition fees could see much higher losses due to EU students failing to repay loans.

The current system issues loans for tuition fees and living costs.  There is additional help for those from poorer backgrounds.  These loans are then recouped automatically when the person who received them begins to earn over fifteen thousand pounds a year.  The coalition’s plans don’t substantively change the system, they simply increase the tuition fees and raise the threshold above which you start repaying the loans.

These loans are also available to any EU student who comes to study in the UK.  This is no bad thing and I think we can be very proud of the number of people who want to come to the UK to study at our numerous world class universities.  In terms of foreign students we lead in the EU by quite some margin. 

The problem comes after these EU students are done with their studies.  The current situation is such that if they decide to leave the country and work somewhere else, the UK government has absolutely no means whatsoever of compelling them to repay their loans.  They are committing a crime, but there are no means of prosecuting them, or the means are so expensive and complicated that the money recouped would be dwarfed by the cost of recouping it.

This has been happening for a while, at a fairly low level it must be said, but now that the fees have been tripled, so to will the losses from this kind of behaviour.  This isn’t mere speculation either.  I have been hearing from certain quarters that this is becoming a growing concern and losses could in fact be far greater than anyone is expecting.

More disturbingly than that, I have heard rumours that people within higher education, such as vice chancellors, are promoting their universities to EU students by explicitly stating that they will not be compelled to repay the loans.  Obviously it doesn’t matter to the university if they repay or not, they get the money no matter what.

Even without this guidance, it wouldn’t take a genius to work this out.  EU students can come to the UK and walk away with a thirty thousand pound education completely free, whilst British students will be forced to pay back this substantial amount of money whilst also contributing through taxes.  We must sort this issue out as soon as possible.  I have written to the commission (see question below) to see if they can see any potential ways of ensuring that loans are paid back by EU citizens.  I also urge the coalition government to look at this problem: your increase in tuition fees could raise considerably less money than you hoped if you don’t ensure that EU students are made to repay their loans. 

The UK currently government provides loans to pay university tuition fees as well as living costs while at university within the United Kingdom.

These loans are available to any EU citizen studying in the UK, not just citizens of the United Kingdom. 

As things stand the Student Loans Company that administers these loans are only capable of compelling people to repay these loans if they go on to earn money within the U.K.  There have been a number of cases where students from other EU countries have left the U.K. after completing their studies and have not paid back their loans.

 Does the Commission envisage any way in which we can ensure that these loans are fully repaid to the U.K. government?  Are there any mechanisms in place to make sure that EU citizens from outside the U.K can repay our government these substantial amounts of money?

1 Comment

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One response to “Increased Tuition Fees mean Increased Losses for the Student Loans Company

  1. Daniel Oxley

    Mary raises an important issue. The loss of revenue from EU students failing to pay back their loans to the UK could be considerable now that the tuition fees are set to rise but one wonders if writing a letter to the Commission is likely to succeed unless the envelope were to include a few large denomination bank notes.

    The EU were unable to account for more than 8% of the money we sent them last year leaving the remaining 92% subject to what the EU’s accountants described as ‘fraud and irregularities’. Setting them the task of tracking down EU students who dodge their financial obligations is a bit like putting a fox in charge of a chicken coup.