Creation of a Free Market in Higher Education

03 October 2014

Author: Rosie Timoney
Sector: Education


In 2015 the UK government will introduce reforms to the higher education model which will axe enforced number controls on university places offered to non-UK students from within the EU. These reforms have been sparked by demographic changes in the UK. With a predicted decline in British school leavers attending university, the UK government will introduce clearer incentives to recruit EU undergraduates in order to increase income, maintain entry standards and fight the changing demographic.

Under the new system there will be no limit on the numbers of non-UK EU students who can attend English universities. The Higher Education Policy Institute (“HEPI”) has published their concerns regarding this decision’s potential impact on student loans and taxpayers. Currently, these EU students are entitled to apply for the same student loans as British students. The fact that student loans are subsidised by the UK taxpayer traditionally placed the impetus on limiting costs incurred by taxpayers from student loans where possible.

Last year, around 60,000 undergraduates from EU countries outside of the UK enrolled at English universities to the tune of £690m of outstanding loan debt. Figures published in the summer showed EU students were already failing to repay a record £38m in loans – a three-fold rise in the default level in just two years.

The primary concern of the HEPI arises from the fact that repayments are very difficult to collect given that, unlike in the UK, the government cannot pursue EU graduates through the tax system. HEPI have called for new rules governing the tuition fee structure, allowing universities to charge higher fees to students from the EU. In turn, they suggest fees could be lower for domestic students on the basis that UK families are already subsidising the education system through tax.

A further issue arises in relation to migration cuts. The UK government has announced that it intends to slash net migrations by more than half. HEPI notes that this is concerning for EU students and those from further afield who, unless they are not exempt from immigration figures, may be unfairly treated in order to drive these cuts.

In 2013, UCAS revealed there had been a record number of applicants for university places in Northern Ireland. While approximately 90% of these applications were from local students, a record number of EU undergraduates applied and were awarded places in Northern Irish universities. Currently, student numbers in Northern Ireland are restricted by limits imposed by the Department of Employment and Learning, referred to as the Maximum Student Number (“MaSN”). While there are no plans to remove this cap on student numbers and bring Northern Ireland in line with the proposed reforms in England, the Northern Ireland assembly have committed to increasing the number of student places by 1,200 between 2013 and 2015. The international prestige of Northern Ireland’s higher education programmes, coupled with the lower tuition fees compared with England and Wales, will likely continue to attract increasing numbers of EU undergraduates. A gradual increase in the MaSN will hopefully allow for more of these students to be accommodated, without leaving the taxpayer vulnerable to subsidising a sudden influx of students applying for loans.

For more information please contact Rosie Timoney.