EU students owe Britain £5bn in loans
Fears taxpayers could end up contributing more cash on top of £8.75bn bill for rejoining Erasmus scheme
EU students owe Britain more than £5bn in unpaid loans, official figures show.
The total outstanding amount, lent to those studying at UK universities, has increased from £0.7bn in 2013-14 to £5.8bn in 2024-25, according to data from the Student Loans Company.
Access to student loans for new EU students, without settled or pre-settled status, ended after Brexit.
But the disclosure has sparked fears that the UK taxpayer could have to give up even more cash on top of the £8.75bn bill the UK faces for rejoining the EU’s Erasmus student exchange programme.
On Wednesday, The Telegraph revealed that the EU could charge Britain £1.25bn a year between 2028 and 2034 for rejoining the scheme, which allows students to spend a year studying at a European university.
It is the first step in Sir Keir Starmer’s drive for closer ties with Europe after he said he was prepared to make “trade-offs”. It follows other agreements, including granting EU boats access to British fishing waters and a pledge to follow European standards on food exports.
Repayment difficult to enforce
Economists and education experts have warned that the difficulty of enforcing repayment of the loans could leave the UK out of pocket to the tune of hundreds of millions of pounds.
UK graduates’ loans are automatically repaid through deductions from their salary via PAYE, but EU students or Britons working abroad have to declare their earnings in an online form and then arrange repayments.
Nick Hillman, the director of think tank the Higher Education Policy Institute, said: “It’s a legal contract, so you still have to pay it back, but it is quite hard to get that money back. The student loan company can enforce that, but it’s very expensive.”
Catherine McBride, an economist, said the Government should have asked the EU to repay the owed money before any new mobility scheme was negotiated. The risk now was that any outstanding liabilities “will fall on UK taxpayers”, she claimed.
“The repayment rate is much higher among UK borrowers because HMRC can deduct repayments directly from salaries. It has been estimated that between 50 per cent and 70 per cent of EU student loans will be written off because enforcement outside the UK is limited.”
Laura Trott, the shadow education secretary, said: “The EU has taken Keir Starmer for a ride. For just the first year, the cost of Erasmus membership is £570m. In 2019, we paid half of that.
“It is not clear where this money is coming from, but we can expect further hacking to education budgets. This is a shoddy deal for taxpayers, who are now being asked to pick up the bill for unpaid loans.”
The Telegraph: continue reading
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