Fees shift could leave UK 'haemorrhaging' cash to EU students

As foreign loan debts balloon, experts fear 2012 rise will make things worse. John Morgan reports

January 27, 2011

The new tuition fees regime in English universities could worsen a "haemorrhage" of taxpayer-funded loans to citizens of other European Union nations, as well as limiting institutions' ability to increase the lucrative fees charged to students from further afield.

Experts have warned that the trebling of the fee cap at English universities to £9,000 from 2012-13 could lead to increasing losses for the taxpayer on loans to EU students, who are entitled to access the UK's publicly funded loans system.

If accurate, the predictions pose serious questions about the financial basis for the new fee regime. In 2009-10, the number of home students accepted by UK universities fell by 0.1 per cent while numbers from other EU states rose by 7.6 per cent.

Bahram Bekhradnia, director of the Higher Education Policy Institute, said it was "likely that many EU students will never pay back their loans", citing the impossibility of enforcing UK tax rules on individuals working outside its borders.

He added that many new EU countries "are much poorer than we are, and so salaries will be much lower, and so first, many more students will fail to reach the £21,000 salary threshold (at which repayment will kick in), and even when they do, with lower salaries many more will reach the 30-year forgiveness date without having repaid it all".

Figures from the Student Loans Company show that EU students' fee debt has risen to £167 million, up from £42 million in 2008.

Joe Docherty, international director at the University of Portsmouth, said the extent of the "funding haemorrhage" to EU students was not yet fully appreciated.

Asked about the impact of higher fees on EU debt, he said: "It is going to be more of an issue. If you look at the size of debt owed by EU students to the UK, it has quadrupled in the past two years. Now we are going to treble fees."

Mr Docherty said that higher fees could lead to a drop in recruitment from countries such as France and Germany, where students are traditionally averse to fees. But this could be balanced by strong recruitment from Eastern Europe and nations such as Greece and Cyprus, which have dismal employment climates and a tradition of families helping with the costs of higher education.

Nicola Dandridge, chief executive of Universities UK, said any problem of recouping loans was "a matter for the government".

There is further uncertainty over universities' ability to continue to increase their income from non-EU students, whose fees can rise as high as £26,000 a year.

Beatrice Merrick, director of services and research at the UK Council for International Student Affairs (UKCISA), said it was "unlikely that overseas fees will rise more steeply than they have in previous years, and if home fees are no longer subsidised, the argument for any kind of differential will come under pressure".

However, Mr Docherty suggested that a differential would persist because higher recruitment and language training costs for non-EU students would remain.


The shrinking welcome mat: Mooted visa reform cools prospective students' view of UK

A survey of overseas students indicates that their view of the UK has already been damaged by plans for a visa crackdown, while more universities may decide to look at establishing overseas campuses to beat the restrictions.

The UK Border Agency's consultation on moves to reduce the number of students from countries outside the European Union closes on 31 January. Its controversial proposals include stopping students from staying on to work in the UK.

A survey of 850 overseas students by course search website HotcoursesAbroad found a high level of opposition to the UKBA plans.

Asked whether they thought that the UK would be a less attractive destination without a post-study work visa system, 21 per cent agreed strongly and another 43 per cent agreed.

Some 61 per cent said that international students would choose to study in another country if the plan went ahead.

The higher education sector was aiming to apply pressure this week with a press conference on 26 January at which senior figures were expected to outline their concerns.

Minutes from a recent University of Essex council meeting note that the "changes to immigration policy could result in international student numbers being reduced by almost a half".

The minutes add: "To secure international student numbers might require the development of an overseas base, as a launch pad for bringing students into the UK."

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