In the heated debate that followed Wonga’s u-turn on its advertising over short term loans to students, it may come as little surprise that students from the European Union who have taken out loans to study in the UK are not paying their fees back either.
The loans, lent in good faith, are due to be paid back imminently. The issue, according to a recent report, is that almost a half of the students who have taken out such loans (45%) are either untraceable or have already fell into arrears. That leaves the financiers with some tough decisions as more and more students are applying for similar loans to fund their studies in this country.
The courts are hardly proving a viable way to recapture the money, either. Sky News requested the figures on the loans from the government under the freedom of information act and were duly obliged. There is no suggestion that the government tried to keep these loan figures under their hat, but if they had, it would be no surprise given the backlash payday lenders felt after the scandal of high interest rate loans offered on a short term basis to UK students earlier this year.
Higher education loans have been on offer to EU students wishing to gain their further qualifications in the UK since 2006. With the suspended repayment dates, the hope has always been that students will contribute back to the system once they start earning – but that is based on them getting jobs in this country. Should EU students return to their homeland once they finish studying at UK universities, the loan company relies entirely on their good will to start making the repayments. Are we starting to see the possible flaw in this ploy, yet?
To date, 9,000 foreign students are not coming forward with the repayments, leaving the UK taxpayer with an outstanding bill of £20M! Of that astounding figure, just £8,000 has been returned to the kitty after being pursued through the avenue of the courts.
The total debt of the 19,000 EU graduates to date stands at a staggering £47.4M. At current pay back rates, the UK economy could look forward to a return on their investment of almost £20k; however, investments usually cater for the return of the original stake as well as the premium to make it worth while.
I think it will be a cold day in hell before we see this payday returning a profit.