Nearly one in five student loans in the United Kingdom were issued to foreign nationals in the last academic year, totaling approximately £4 billion, according to new figures. This trend has prompted concerns among critics that British taxpayers could be liable for a multi-billion-pound shortfall in unpaid debt.
The majority of these loans were granted to European Union nationals who benefited from post-Brexit residency arrangements, with Romanian citizens accounting for a significant portion of first-time loans. Overseas borrowers are estimated to be about 25% less likely to repay their debts compared to British graduates, potentially leading the Treasury to write off between £1.2 billion and £2.2 billion annually.
Under existing regulations, most international students are ineligible for UK student loans and are expected to self-fund their education. However, exemptions apply to EU citizens and their relatives who obtained residency rights through the post-Brexit settlement scheme. Official data indicates that out of 239,000 foreign nationals currently receiving student loans, approximately 195,000 hold settled status.
Figures compiled by Conservative MP Neil O'Brien reveal that the proportion of student loans allocated to non-UK citizens has nearly doubled over the past decade, increasing from 10.2% to 19.3%. O'Brien has voiced apprehension regarding the continued expansion of the settled status scheme, noting that over 36,000 individuals were granted settled status in the past year, along with an additional 30,000 family members.
"In the past 12 months alone, around 66,000 completely new applicants gained residency via this scheme, five years after the deadline," O'Brien stated, questioning the basis for these late claims.
The issue surfaces amidst broader concerns about potential misuse of the student finance system. Ministers have previously acknowledged a disproportionate number of Romanian nationals claiming student finance, and regulators have identified some college courses as potentially vulnerable to exploitation.
A spokesperson for the Department for Education asserted that stringent eligibility checks are in place and that individuals who leave the UK remain obligated to repay their loans. The Student Loans Company possesses the authority to pursue enforcement actions and engage debt collection agencies. The department added that the government is actively working to combat abuse within the student finance system by closing regulatory loopholes and preventing misuse.