Share and Follow
Recent reports suggest that graduates are exploiting the student loan system, costing billions, as authorities struggle to keep track of a substantial number of borrowers.
The Student Loans Company (SLC) has acknowledged a lack of information regarding the employment or financial status of over 370,000 borrowers, collectively owing nearly £13 billion.
This group largely comprises EU students who have returned to their home countries and UK citizens who have relocated overseas.
Some individuals may be unemployed, receiving government assistance, or not earning enough to meet repayment thresholds.
Experts caution that this “leakage” from the repayment process poses a risk of financial burden on taxpayers.
Nick Hillman, director of the Higher Education Policy Institute (HEPI), said: ‘These large numbers show a huge potential leak from the student loan system.
‘We have seen in recent weeks how angry graduates are at having to pay so much for their own education, but someone will also eventually have to pick up the tab for those who go entirely missing from the system.’
Mr Hillman went on to advise that policymakers ought to ‘look at New Zealand’ where ‘severe late payments’ are imposed for those failing to reimburse the money owed.
Graduates are ‘scamming’ the student loan system out of billions as officials say they have lost track of hundreds of thousands of customers, it has been claimed (file image)
Rupert Lowe said: ‘I believe there is an industrial scam ongoing in which foreigners, particularly from Romania, take loans with the intention of never repaying them’
Independent MP Rupert Lowe, who obtained the figures in a written parliamentary answer, argued an investigation was necessary to establish whether the university loans system was being ‘scammed’ by foreign students who would fail to repay the money.
Mr Lowe said: ‘I want to know exactly how many of these lost students are foreign nationals.
‘I believe there is an industrial scam ongoing in which foreigners, particularly from Romania, take loans with the intention of never repaying them.
‘I am urging Government to launch a full investigation and then restrict the eligibility of student loans to UK nationals only.
‘Billions and billions gone. Who’s accountable? Who’s been sacked? Where is the investigation?
‘This is gross incompetence at best, industrial fraud at worst. There must be severe consequences.’
Richard Fuller, a Tory education spokesman, told the Telegraph he feared the taxpayer could face a ‘colossal tab’.
He added: ‘Every penny of taxpayers’ and every additional loan made in the name of our taxpayers should be handled with the same seriousness and care as our citizens take with their own household finances.’
Earlier this week, it emerged Keir Starmer ‘could hand EU students cut-price tuition fees’ (file image)
As of December last year, the total value of all outstanding loans to be repaid was £226billion.
Therefore, the £12.8billion worth of loans where graduates’ income could not be verified represented just under 5.7 per cent of the total.
And the 376,410 graduates whose income was unverified equated to one in 15 or 6.64 per cent of the 5.7 million students or graduates with outstanding loans to be repaid.
The SLC denied all unverified customers were missing – insisting they may not be required to repay their loans.
It was admitted, however, they may also be abroad.
The organisation said customers must inform SLC if they would be abroad for three months or more – meaning some graduates may be within this three-month period.
Earlier this week, it emerged Keir Starmer ‘could hand EU students cut-price tuition fees’.
The Prime Minister was warned UK universities would suffer a £580million hit if he allowed a discount for under-30s from the EU who study in Britain.
Since Brexit, EU students in the UK have been charged higher international fees, of between £11,400 and £32,000 a year, compared to the lower domestic rate for British students of £9,535 a year.
But the EU is pushing for the Government to lower tuition fees for EU students in the UK as part of a proposed youth mobility deal.
Sir Keir has agreed to the ‘youth experience scheme’ as part of his Brexit ‘reset’ deal, which will allow 18 to 30-year-olds from the EU to live, work and study in the UK.
Negotiations over the reciprocal agreement, which will also allow young Britons to live, work and study in the EU, have stumbled over the issue of tuition fees.
Labour will be wary of granting a discount for EU students while British graduates continue to struggle under a mountain of debt from student loans.
New polling by YouGov shows more than four in 10 (44 per cent) of Britons think the Government should write off some or all of student debt.
The survey also showed three-quarters (76 per cent) of respondents see interest rates of 6 per cent on some student loans as too high.
Two-thirds (68 per cent) said £9,000-a-year tuition fees charged for domestic students in England as too high, according to the poll.