The Conservatives have announced plans to save £900 million a year by cutting access to student loans for non-UK nationals.
Around 20% of student loans now go to non-UK nationals, up from about 10% in 2015. We will end this access for non-EU nationals. While those with EU Settled Status (EUSS) have protected rights, we will end new claims for this status, which is being abused.
There is no good reason why the Home Office are continuing to wave through new applications, and yet in the past 12 months alone, around 66,000 completely new applicants gained residency via this scheme, five years after the deadline.
So we will stop new EUSS claims and tighten access to student loans as part of our wider tightening of student loan access. Expected losses on student loans score as public spending, and repayment rates for non-UK borrowers are lower than for UK nationals. We estimate that by cutting student loans for non-EU nationals we will save around £900m.
In 2024/25 foreign nationals received around £4bn in student loans. One in five people getting student loans were non-UK nationals. 5% of all first-time student loans in the UK went to Romanians alone.
There are good reasons to think access to student loans is driving very high numbers of Romanians to apply for EUSS (long after the deadline) which gets them a student loan. They are much more likely to apply than other nationalities. At least one in every 20 Romanian citizens has settled or pre-settled status in the UK.
Rather than tailing off as you’d expect, both the number of late applicants and joining family members actually rose sharply in the last quarter.
Even if non-UK nationals were as likely as UK nationals to repay, we would expect to lose 30% of the £4 billion a year.
But in practice, almost all nationalities have a repayment rate significantly lower than UK nationals. The average repayment rate for non-UK nationals is just 51% - much lower than the UK repayment rate (68%).
The EU, meanwhile, is demanding more for its students, saying they should get home-fee rates. Agreeing to this will cost universities hundreds of millions of pounds in lost income, at a time when their finances are already under pressure.
We still want the brightest and best from around the world to study at our great universities. They just cannot expect British taxpayers to foot the bill.
We will save taxpayers money by stopping handing out UK student loans to non-EU nationals – and stop handing out new grants of EU settled status five years after the deadline. We cautiously calculate that this would save around £900m.
Andrew Griffith MP, Shadow Chancellor, said:
“Labour is handing out £4 billion a year in student loans to foreign nationals, and barely half of it is ever paid back.
“Instead of stopping it, Shabana Mahmood is still waving through tens of thousands of new settlement claims five years after the deadline.
“A Conservative government will turn off the tap and save £900 million a year.”
Laura Trott MP, Shadow Education Secretary, said:
“Too many people are abusing the EU Settlement Scheme and the student loan system.
“We want to welcome international students to our universities, but not at the expense of British students and taxpayers.
“Repayment rates are lower among overseas borrowers, leaving British taxpayers to pick up the bill. This is not fair.”
