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New limits on living cost support for EU students

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PostPosted: Sun Mar 06, 2016 1:35 pm    Post subject: New limits on living cost support for EU students Reply with quote

Jo Johnson, the minister for universities and science, has announced that the government is increasing restrictions on European Union nationals accessing student living cost support in England from 2016-17.

The residency requirement for EU nationals before they can be eligible for such support is being raised from the current three years’ residency in the UK to five years’ residency.

“The higher education student support budget is under pressure from increasing numbers of applicants from the EU and the government is taking steps to manage the burden on the taxpayer,” Johnson said in a written statement to parliament on 1 March.

The Department for Business, Innovation and Skills estimates that for every 1,000 individuals that forgo entry into higher education there would as a result be combined tuition and living cost savings of around £15 million (US$21 million) per year; and for every 1,000 individuals who continue in higher education but without student support for living costs there would be cash savings of around £7 million per year.

Currently in England, EU nationals and their families are able to apply for a tuition fee loan and be charged the 'home' rate of fees to attend higher education. This mirrors provisions available to UK students wishing to study abroad in other EU countries.

But to access student finance, EU nationals need to have been resident in the European Economic Area or Switzerland for the three years prior to the first day of the first academic year. To apply for living cost support EU nationals have to have been resident in the UK, Channel Islands or Isle of Man for three years.

This requirement will now change to five years’ residency later this month. Students who are already studying will not be affected.

In line with other EU countries

The minister said: “This change will bring us more into line with the rules set by other EU countries including Austria, Belgium, Denmark, Finland, France, Germany, the Netherlands and Sweden, which generally require five years’ residency in the home country before students become eligible for living cost support.”

The recently published Student Loan Repayment Strategy will help to ensure all borrowers repay what is due, he added.

The increased residency requirement will not apply to UK nationals, to whom the existing three-year residency rule will continue to apply.

European Economic Area migrant workers and their family members are also not affected by this change.

A consultation on the change was launched on 1 September 2014 and closed on 10 November 2014.

According to the Department for Business, Innovation and Skills, since the consultation a new revision to the living cost support package is being introduced, where new students will no longer qualify for grants but will instead qualify for an increased loan for living costs. This will result in EU students being able to access increased loans from the academic year 2016-17.

Pressure on budget

A report on the consultation into the proposed changes to eligibility criteria concluded that “the increasing numbers of EU students who are accessing full student support alongside the difficulty of recovering loans if they return to their home country after graduation is adding further pressure to the higher education budget”.

It found evidence that England's student support eligibility criteria are more generous than in other European countries. Many countries, for example, Austria, Belgium, Denmark, Finland, France, Germany, the Netherlands and Sweden have a five-year residency requirement for EU students but not for home students.

However, the report could not say how many students would be affected by the rule change, because it is not known how many students have been in the country for between three and five years.

Increasing burden

The report said there has been a trend for increasing numbers of full-time EU domiciled students to receive tuition fee loans, up from 8,200 in 2006-7 to 14,800 in 2014-15. The number receiving tuition fee support has risen slightly, from 31,700 in 2011-12 to 37,200 in 2014-15.

The number of EU nationals claiming living cost support has also increased substantially over a similar period. In the academic year 2009-10 there were around 11,600 EU nationals who received living cost support at a cost of £75 million. This has risen to around 31,500 awards in the academic year 2014-15, amounting to £240 million – an increase of 220%, the report said.

It added that it is also generally more difficult to collect loans from EU borrowers as they have a greater tendency than UK nationals to move overseas after graduation. Of the 9,900 EU domiciled tuition fee borrowers who should have started repaying their loans in 2013, 29% had either fully repaid or were over the earnings threshold and had made a repayment towards their loans. This is compared with 50% across all domiciles.

“EU domiciled borrowers are more likely to have failed to supply details of their income and are more likely to have been placed in arrears than English borrowers. We estimate that less than half of EU tuition loan borrowers remain in the UK after completing their studies and begin repayments through the UK tax system,” the report said.

The report recognises that the change will have a “deterrent effect” as EU nationals “may not meet the proposed new residency requirement”.

“These students may decide to still enter higher education but forgo student living cost support, or they may delay their entry to higher education for two years or they may choose to study in another country. Alternatively, they may choose to study part-time whilst also working.”

The British taxpayer has been subsidising foreign students long enough. As the article states, EU students are far more like to disappear and default on loans, so good news that this government is taking a tough stance.
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