British taxpayers have financed billions of pounds in student loans for EU borrowers studying at English universities, with the outstanding balance now hitting £6 billion and £360 million in arrears.
Yet the EU wants greater access to British higher education. Before ministers contemplate opening the door any wider, taxpayers deserve answers about the money already outstanding.
The extraordinary scale of Britain’s EU student loan book has been laid bare, with official figures showing that the outstanding balance held by EU borrowers has reached £6 billion. That is up from just £700 million in 2013-14.
And while that £6 billion is not all overdue, new figures obtained by Conservative MPs reveal a much more immediate problem: £360 million is already in arrears and tens of thousands of EU borrowers living overseas have made no repayments at all for an entire year.
The figures have emerged after Conservative MPs Mike Wood and Shivani Raja pressed ministers for answers over the amount of taxpayer-backed student finance sitting with EU and overseas borrowers.
And the answers raise serious questions about how effectively Britain can recover money once borrowers leave the country.
Wood, Conservative MP for Kingswinford and South Staffordshire, asked the Government for both the yearly and cumulative value of unpaid and defaulted student loans held by EU students.
The answer, published on October 5, revealed that as of August 30 the value of loans liable for repayment held by EU borrowers that were in arrears stood at £360 million.
The Department for Education could not provide an annual breakdown of how that mountain of arrears had accumulated because, ministers said, the Student Loans Company’s systems do not maintain a historical year-by-year record of arrears.
Raja, Conservative MP for Leicester East, asked another simple question: how many EU national student loan borrowers living abroad had made no repayments in the previous 12 months?
The answer was 43,700.
There were 103,400 EU borrowers living overseas whose loans had become liable for repayment. Of those, 43,700 were either earning above the relevant repayment threshold or had unknown earnings and had made no repayments during the previous year.
That is more than four in ten.
There is an important distinction here.
It would be wrong to claim that all 43,700 are deliberately refusing to repay their loans. The figure includes borrowers whose earnings are unknown, and the Student Loans Company can apply a default repayment rate to overseas borrowers who fail to remain in contact, which can result in arrears accumulating.
Nor does the £6 billion figure mean taxpayers have lost £6 billion.
It is the total outstanding balance on the EU higher education loan book, including money being repaid normally, balances held by borrowers who are not currently required to repay because of their earnings, and interest added to outstanding loans.
But this is nevertheless British taxpayer-backed money on an enormous scale.
Official Student Loans Company statistics show the EU higher education loan balance has exploded from £700 million in 2013-14 to £6 billion by the end of 2025-26.
It stood at £5.8 billion just a year earlier, meaning the balance increased by another £200 million in the latest financial year.
The taxpayer ultimately carries the risk attached to these loans.
And unlike a graduate living and working in Britain, whose repayments can ordinarily be collected through the UK tax system once they earn enough, collecting from someone who has left the country presents an obvious additional challenge.
Overseas borrowers are required to tell the Student Loans Company if they live outside the UK for more than three months and make the required repayments when they earn above the applicable threshold.
If they fail to remain in contact, the SLC can apply a default required repayment rate and place them in arrears. Ministers say the outstanding balance can then be pursued as debt.
The Government says it can use debt collectors and, where necessary, legal action to recover money. But the £360 million arrears figure raises an obvious question: how well is that system actually working?
British taxpayers provided the money. They are entitled to expect it back when repayments become due.
Brexit should help protect the British taxpayer
There is another important piece of context. This is substantially a legacy loan book.
Following Brexit, tuition fee funding for new EU students in England without settled or pre-settled status ended from the 2021-22 academic year. Those continuing existing courses could remain eligible for support, while qualifying EU citizens protected by the Withdrawal Agreements retained rights subject to the relevant conditions.
In other words, Britain has already moved away from the old system under which EU students enjoyed much wider access to home-fee treatment and student finance.
Yet despite that change, the EU loan balance remains at £6 billion.
And that makes another parliamentary answer obtained by Mike Wood particularly significant.
Wood asked what estimate ministers had made of the annual cost to British universities if EU students were once again allowed to pay the same tuition fees as home students.
The Government said it had not agreed to reduce tuition costs for EU students. But then came an intriguing admission.
“However, we know that there is interest in the EU about greater access to the UK higher education sector,” ministers said.
That does not mean Britain has agreed to restore home-fee status or taxpayer-backed student finance to EU students. It has not.
Indeed, ministers have separately said that changes to EU tuition-fee status were not agreed at the May 2025 UK-EU summit.
But if greater access to British universities becomes part of future negotiations with Brussels, these figures surely belong at the heart of that conversation.
Before any government considers extending preferential arrangements, British taxpayers are entitled to ask how the money will be collected when students return overseas.
£360 million already in arrears
The £360 million figure is particularly significant because it is not simply the total amount EU borrowers happen still to owe. It is arrears. And ministers themselves appear to recognise that the overseas collection system needs strengthening.
Education minister Josh MacAlister said in a separate parliamentary answer that borrowers living overseas must remain in contact with the Student Loans Company and make repayments when required.
Where borrowers become non-compliant, the SLC can use fraud detection and investigative techniques, employ debt collection agencies and, ultimately, take legal action to secure repayment.
The question now is what all that enforcement is actually recovering.
How much of the £360 million in arrears does the Government realistically expect to get back? How much was recovered from overseas EU borrowers during the last financial year? How many of the 43,700 borrowers who made no repayments have subsequently been contacted and brought back into compliance? How much is Britain spending pursuing overseas borrowers? And how much is being successfully recovered?
Those are not anti-European questions. They are basic questions about protecting public money.
Billions more going to non-UK nationals
The issue stretches beyond the historic EU loan book.
Separate parliamentary answers obtained by Raja show that non-UK nationals received £3.97 billion in student loans during 2024-25, equivalent to 20.4 per cent of the total value of student lending that year.
That is a much broader category and must not be confused with EU borrowers living overseas.
Eligibility for student finance depends on immigration and residency status rather than nationality alone, and many non-UK nationals receiving loans live, study and work in Britain and will repay through the normal system.
But £3.97 billion remains an extraordinary amount of taxpayer-backed lending, and taxpayers are entitled to expect rigorous safeguards around eligibility and repayment.
First account for the money already outstanding
Britain should remain a magnet for talented students from across Europe and the wider world. Our universities are among this country’s greatest assets, and international students make an important contribution to many of them. But welcoming international students and asking British taxpayers to finance their education are two entirely different propositions.
The latest figures expose the scale of the distinction. The EU higher education loan balance stands at £6 billion. £360 million of EU loans liable for repayment is in arrears. And 43,700 EU borrowers living abroad, who were either earning above the relevant threshold or whose earnings were unknown, made no repayments for an entire year.
Meanwhile, the Government acknowledges there is EU interest in greater access to British higher education.
Before ministers entertain any proposal involving preferential fees or taxpayer-backed finance, there should be a very simple principle. Account for the money already outstanding. Demonstrate that repayments due from borrowers overseas can be effectively collected. And ensure that any future arrangement protects the British taxpayer from being left carrying the risk.
Conservative MPs Mike Wood and Shivani Raja deserve credit for forcing these extraordinary figures into the open.
Now Labour ministers need to explain what they intend to do about them.
With £6 billion outstanding, £360 million in arrears and 43,700 EU borrowers abroad making no repayments for a year, there is a fundamental question ministers cannot duck: why should British taxpayers be asked to back billions of pounds in student loans for EU borrowers without robust guarantees that the money will come back?
And if Brussels wants greater access to British higher education, ministers should be equally clear about whose interests come first.
Before committing British taxpayers to any new concessions or financial support, the Government should explain why that money should not instead be prioritised for young people studying here at home.
Britain’s young people and Britain’s taxpayers deserve to be at the front of the queue.
