Are half of EU students failing to repay their loans?
"Half of EU students failing to repay loans: Taxpayers' £11m bill as thousands get a 'free education'."
Daily Mail, 10 August 2012
"Nearly half EU students 'fail to repay loans'."
Daily Telegraph, 10 August 2012
With this autumn's intake of students set to be the first to face tuition fees of up to £9,000, Universities Minister David Willetts took to the airwaves this week to claim that, despite a "modest fall" in applications, the prospect of higher debt was not putting potential students off university.
But will the hike in fees provide the financial boost to the higher education sector that the Government argues is necessary?
Two papers this morning claimed that some students from Europe were getting a 'free education' at the taxpayer's expense as half of EU nationals who took up loans while studying in England had failed to keep up with repayments.
Is this the case?
As both the Telegraph and Mail mention in their articles, Ministers themselves have estimated that 9 per cent of EU students were in arrears with the Student Loan Company.
This figure was drawn from a Parliamentary Answer, in which the Universities Minister told the Commons that "At this date, 2,800 or 9 per cent of [18,900] EU borrowers liable to repay were considered to be in arrears."
Clearly this is some way short of the 50 per cent figure that made its way into the newspaper headlines this morning.
To get to this figure, the papers have brought into the mix:
"another 33 per cent of borrowers... classed as 'not currently repaying — further information being sought'."
This would bring the total up to 42 per cent. Leaving aside the question of whether this really constitutes 'half' or 'nearly half' of the total as the Mail and the Telegraph describe it respectively, are these students really in arrears?
The figure itself has been drawn from a Student Loans Company dataset which details the repayments made and outstanding by EU and British nationals alike.
Sure enough, we can see that 9,900 of the 29,600 borrowers liable for repayments - or 33 per cent - were currently classed as 'not currently repaying — further information being sought'.
However a look at the footnotes shows that these are former students for whom there isn't the requisite tax records needed to "establish correct repayment status." This might suggest that these aren't borrowers who have 'failed' to repay, but those who haven't yet been asked for money.
To clear the matter up, we got in touch with the Student Loans Company, who confirmed that the third of graduates placed in this category "are not in arrears", adding:
"It can only be speculation that once the outstanding information is obtained that all of these students will be found to be above the relevant earnings level and therefore in arrears and there is no evidence whatsoever for that in the figures."
They also took issue with another "misleading" element of the Mail's reporting. The newspaper had written that:
"EU students' total outstanding debt ballooned from £49.2 million in 2009/10 to £111.1 million in 2010/11, the most recent year for which figures are available."
The Student Loans Company argue that this might leave the reader with the impression that it was the same groups of borrowers who have seen their share of the debt increase, when in fact the £49.2 million figure was spread across 9,900 EU students, while the £111.1 million debt on the subsequent year was shared between 18,000 students.
The headline claim made in both the Mail and the Telegraph that half of EU students are 'failing' to repay their loans isn't supported by the facts. Only 9 per cent are actually in arrears, and even this group aren't necessarily receiving a "free education", as the Student Loans Company continues to chase defaulters for 25 years.
To get to the figure used by the newspapers we also have to include those borrowers for whom there isn't enough information for the Student Loans Company to start billing them. However this group isn't 'failing to pay', but rather those that haven't yet been asked for money.
Full Fact will be asking both publications to correct the record and will keep readers informed of our progress.