New data has revealed the burden on the British taxpayer as foreign students are 25% less likely to pay back their loans compared to British borrowers.

10:17, Fri, Aug 7, 2026 Updated: 10:19, Fri, Aug 7, 2026

Cap and gown

New student loan data has been revealed (Image: Getty)

Foreign students were handed around £4billion in student loans over the last year, new figures have revealed. This equates to around 20% of all tuition and maintenance loans given through the scheme, with non-British students receiving as many as one in five student loans in the UK.

The research also shows that foreign borrowers are 25% less likely to pay back their loans compared to British students which could cost the taxpayer between £1.2billion and £2.2billion every year. Although student loans are usually unavailable to foreigners studying in the UK, those who hold settled status can get money under the EU Settlement Scheme. They must have lived in the UK, Channel Islands, or Isle of Man for three continuous years before the first day of the academic year.

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As reported by GB News, around 195,000 of the 239,000 foreign students receiving loans currently hold settled status. Meanwhile, the share of loans going to non-UK students has risen from 10.12% to 19.3% in the last decade.

The figures were compiled by Harborough, Oadby and Wigston MP Neil O'Brien (Conservative) through parliamentary questions and freedom of information requests.

He said: "In the past 12 months alone, around 66,000 completely new applicants gained residency via this scheme, five years after the deadline. Why are the Home Office allowing these implausibly late claims, and on what basis are they still being granted?"

He added: "My worry is that too many of these people will leave and not repay, or are getting the loan to top up their income while mainly working and doing a bit of studying," he said.

Neil O'Brien

The new figures were obtained by MP Neil O'Brien (Image: -)

"If we stop the flow of new EU settled status claims, the flow of EU student loans is likely to dry up too. Foreign nationals received £4billion in student loans in the last academic year.

"Yet the Department for Education has no idea how much of this we will get back or not but we could easily be losing over £2billion a year on loans we should not be making. This is not right, not fair, and not sustainable."

Earlier this week, over 120 MPs urged Chancellor John Healey to carry out an "urgent review" of the student loan repayment system. A cross-party letter described the current system as "unsustainable and unfair financial burden."

Lucy Powell, the education secretary, previously called the interest rates on loans "egregious". She has now pledged to tackle the issue, saying last week that the matter was at the "top of my in-tray".

Labour Party Annual Conference - Day Three Leader's Speech

Lucy Powell has pledged to tackle the issue (Image: Getty)

A Department for Education spokesman said: "We have strict eligibility requirements for student loans nobody who lives outside of the UK can apply for or receive a loan. Anyone leaving the UK must continue to repay what they owe.

"The Student Loans Company can take enforcement action and uses debt collection agencies. The public rightly expect these debts to be paid, and we are working with them to go further.

"We are also cracking down on abuse of student finance at its source, closing loopholes in regulation and preventing misuse of the system."