Burnham’s EU fee discount ‘risks university finances’, warn v-cs

Plans to spend up to £450 million a year to reduce tuition fees for European Union students could heap further pressure on institutional finances and represent a major political gamble for Andy Burnham’s government, critics have warned.

Ahead of a much-anticipated trade summit in Brussels on 20 November, EU officials have indicated that fees for European students must be equal to those paid by UK undergraduates in return for Britain joining the Made in Europe industrial scheme – an initiative to protect EU industries from Chinese competition. Without access, UK manufacturing firms could be locked out of European supply chains, ministers fear.

To compensate UK universities for any loss of income from EU students, who pay up to £60,000 a year, ministers are preparing to give institutions up to £450 million annually, the Guardian has reported. Without an immediate guarantee on fee levels, a highly prized deal on food and drink exporting rules could also be at risk, the paper said.

Committing to the subsidy – which is nearly double the £277 million provided by the Office for Students to help disadvantaged students in England in 2026-27 – is likely, however, to expose ministers to criticism after its failure to tackle cost concerns related to Plan 2 loans in this month’s Budget.

“The British people want their taxes to be spent on providing essential public services and helping vulnerable people. Why would they want their money spent on subsidising the education of people who don’t live in this country?” said Caroline Johnson, a Conservative MP who quizzed education secretary Lucy Powell about the reported deal at an education committee hearing last week.

“Labour are choosing, it seems, not to spend money helping students with Plan 2 loans but finding half a billion pounds a year to make it cheaper for Europeans to study here,” Johnson told Times Higher Education, who noted that Powell had previously said Plan 2 loans were at the “top of my inbox” when she took over the education department in July.

The Russell Group, which represents 24 research-intensive universities and enrols the majority of EU students, is also opposed to the policy. Moving EU students into the “home fee” category – currently £9,790 – would cost UK universities about £500 million a year, it estimates.

“The loss of half a billion pounds from the sector would be another hit to universities as they strive to maximise their contribution to local communities and to regional and national economic growth,” said Hollie Chandler, director of strategic policy at the Russell Group, noting that the move would “put an extra squeeze on places for UK students” and “put further strain on UK universities”.

Diana Beech, director of the Finsbury Institute at City St George’s, University of London and former adviser to three universities ministers, warned ministers that they are “taking a political gamble” because “many prospective and current home students will ask why ministers can suddenly find hundreds of millions of pounds to reduce the cost of studying for those from overseas while doing little to ease the financial pressures facing British students”.

“Student maintenance support continues to fall well short of actual living costs, while graduates on Plan 2 loans remain trapped in a system that sees many paying more for longer. Rightly or wrongly, there is a risk this will be seen as overlooking those already struggling within the system in favour of internationally mobile students, including those who may well have chosen to come to UK universities regardless of fee reductions,” said Beech.

Universities might be unwilling to recruit significant numbers of EU students at the lower rate even if their shortfalls are underwritten by the Burnham government, she continued.

“The promise to underwrite lost income could be reversed as quickly as it is introduced. Recent history shows that governments can, and do, revisit funding and financing arrangements retrospectively, whether through changes to student loan repayment terms or immigration policy,” warned Beech.

“Any settlement that depends on government goodwill today could be altered by a different government tomorrow, particularly as the next general election draws nearer,” she said, adding that “few vice-chancellors will want to base their long-term financial planning on a political agreement that may not last”.

Others have, however, welcomed the potential deal which follows a sharp fall in enrolments from the EU since students became ineligible for student loan funding.

Vassiliki Papatsiba, reader in social sciences at Cardiff University who has researched the impact of the post-Brexit slump in EU enrolments, said ministers should champion the broader economic, social and educational benefits of having EU students at UK universities.

“The public debate often focuses on what students cost. The more important question is what they contribute. The contributions of European students cannot be reduced to revenue, even though participation matters for institutional finances,” said Papatsiba, noting how lecturers often attest to how “European students lift classroom quality, push curricula beyond UK‑centric examples and sustain a broad range of courses that otherwise struggle in many regions”.

“Today’s EU student is frequently tomorrow’s PhD candidate, researcher or industry partner; their contribution reaches far beyond tuition income,” she said, adding that the UK needed to “rebuilds the networks...that underpin UK science and innovation”.

“This isn’t about special pleading; it’s about practical reciprocity that benefits UK students and employers,” said Papatsiba, arguing that a “carefully targeted subsidy that brings fees closer to home rates is a strategic investment rather than a giveaway.”

Providing a subsidy to significantly increase EU student numbers would “complement, not compete with, our commitment to UK students”, Papatsiba continued.

“Diverse, well‑resourced cohorts protect programme viability and the quality of learning for home students. The question isn’t whether EU students deserve special treatment; it’s whether the UK benefits from their presence. On the evidence, the answer is yes. We’re rebuilding practical ties with our closest neighbours so that UK students learn in diverse classrooms, our universities stay competitive, and our regions gain from the skills and spending these students bring,” she said.

jack.grove@timeshighereducation.com