Theresa May is facing a cabinet row over plans to charge EU nationals the same rates as other international students to study at English universities, in a move that critics claim undermines Britain’s competitiveness.
The proposal would see tens of thousands of EU students, who are currently charged the same tuition fees as home students, facing a big increase in fees from 2021 after Brexit.
The Treasury has indicated its concerns about the proposal because it would reduce the flow of talent arriving in Britain. Internal government estimates suggest the move could reduce by two-thirds the number of students from the bloc studying in England.
“There is a good amount of talent here and we want to maintain that,” said one person briefed on Treasury thinking. “The discussions are just beginning, but the Treasury is in favour of the status quo.”
Sam Gyimah, who quit as universities minister at the end of last year in protest at Mrs May’s Brexit policy, said: “It’s short sighted. There is no sense of what is strategic, what is in our interests, including in terms of promoting the English language.”
The row threatens to reopen divisions between Mrs May, who wants to bear down on immigration, and liberals in the cabinet who want to limit the impact of Brexit on the economy.
The proposal to end the preferential treatment for EU students has been made by education secretary Damian Hinds, a May loyalist, who has written to fellow cabinet ministers to seek their views. No final decision has been taken.
Currently, EU students are treated in the same way as home students in English universities. Tuition fees are capped at £9,250 a year and EU students are eligible for student loans, underwritten by the government, to meet their upfront costs.
Mr Hinds’ plan, first reported by BuzzFeed News, would apply to students starting courses in the 2021/22 academic year, at which point Britain is scheduled to have left the EU and exited a transition period.
The minister argues that from 2021 EU students should pay the same rates as those from, for example, India or Australia and that the government should not be underwriting their loans, many of which are never repaid.
The proposal would see English universities charging EU students standard international rates, which typically range from £10,000 to £25,000 a year. In 2017, there were 135,000 non-British EU students studying at UK universities.
“Our world-class universities will continue to be world class and students from across the world will continue to benefit,” said one ally of Mr Hinds, noting that international student numbers had been increasing.
“The key thing is to recognise that overseas students, from EEA and non-EEA countries alike, are a national asset, not just numbers to be managed down as part of a net migration target,” said Jo Johnson, a former universities minister.
The Department for Education recognises that other EU countries would probably increase charges on English students studying on the continent, but argues that four times more EU students study in England than vice versa.
It also claims that although EU student numbers might fall, those who did attend English universities would be paying higher fees, thus leaving academic institutions in roughly the same position financially.
Mr Johnson said: “The education and trade department only last month published an international education strategy targeting exports of £35bn by 2030: that’s all well and good, but we need policies to make this a reality, otherwise it’s meaningless.”
Gavin Esler, a former BBC TV news presenter who is standing for the pro-Remain Change UK party in next month’s European elections, urged EU citizens in Britain to use their vote to protest against “another dreadful idea from this dim-witted government”.
One insider at the DfE said the policy was “mad” and described it as part of a pattern of decisions by Mrs May to clamp down on immigration.
The post-Brexit “skills-based” immigration regime envisaged by the prime minister would also treat EU nationals in the same way as visa applicants from other countries.
Meanwhile, under changes introduced in 2012, while Mrs May was home secretary, foreign students from outside the EU are only allowed to remain in Britain for four months after their university courses conclude.
Mr Johnson last week tabled an amendment to the immigration bill calling for foreign students to be allowed to stay for two years after they graduate.
Universities UK, which represents the sector, said: “Whatever the eventual fee status of EU nationals, universities need at least 18 months’ notice of any change.”
Nick Hillman, head of the Higher Education Policy Institute, a think-tank, said: “Morally, it would be exceedingly hard to defend charging richer Germans less than poorer Indians if we are not in the EU.”
But he added that EU students would lose out twice under the proposed reforms: “Losing access to the loans matters as much as the headline fee because suddenly they will have to find the money up front.”