Reform UK's latest policy proposal has ignited fresh debate within the UK's higher education sector, targeting a specific group of students who currently benefit from taxpayer-backed financial support. The party's plan to bar foreign nationals from accessing UK student loans underscores broader concerns about immigration, university finances, and the sustainability of public funding for higher education. As universities grapple with deficits and declining international enrollments, this suggestion arrives at a pivotal moment, prompting questions about equity, access, and the role of settled migrants in British campuses.

The United Kingdom's higher education landscape is under strain, with many institutions facing multimillion-pound shortfalls amid frozen domestic fees and volatile international recruitment. Against this backdrop, Reform UK positions its proposal as a measure to prioritize British students and curb what it describes as systemic abuse, potentially reshaping access to university for thousands of long-term UK residents who are not British citizens.

Reform UK's Announcement and Key Arguments

Reform UK, the rising right-wing party led by Nigel Farage, unveiled the policy in late April 2026 through its education spokesperson, Suella Braverman. In a pointed commentary, Braverman argued that universities have become 'visa factories' and 'cashpoints,' prioritizing mass immigration over educational quality. She highlighted that last year, around 250,000 to 300,000 foreign nationals accessed student loans totaling over £4 billion, much of which may never be repaid due to low recovery rates.

The proposal would reserve tuition fee loans, maintenance loans, and grants exclusively for British nationals, forcing foreign nationals—even those with settled status—to self-fund their studies. Reform claims this would save taxpayers approximately £2 billion annually, funds that could be redirected to enhance opportunities for domestic students, such as scrapping loan interest and extending repayment terms to 45 years for Brits. This forms part of a wider manifesto emphasizing apprenticeships, two-year degrees, and stricter post-study work visas limited to 'essential skills.'

Current Eligibility Rules for Student Loans

To grasp the proposal's scope, it's essential to understand who qualifies for UK student finance today. Administered by the Student Loans Company (SLC), support is available to undergraduates who meet residency criteria. UK nationals and Irish citizens automatically qualify if ordinarily resident in England.

Foreign nationals can access loans if they hold 'settled status'—indefinite right to remain—or equivalent, and have lived in the UK for at least three years prior to the course start. This includes EU/EEA/Swiss citizens with pre-settled or settled status under the EU Settlement Scheme (EUSS), refugees, those with indefinite leave to remain (ILR), and long-term residents. These students pay 'home' fees (around £9,535 for 2026/27) rather than international rates (£20,000+), and borrow up to £13,000 in maintenance loans alongside tuition coverage.

Crucially, visa-holding international students—those on sponsored study visas—do not qualify; they must pay full fees upfront and cover living costs privately. The ban targets the settled group, estimated at tens to hundreds of thousands, amid rising numbers post-Brexit and humanitarian intakes.

The Growing Scale of Loans to Foreign Nationals

Freedom of Information data obtained by media outlets reveals a sharp rise. In 2021-22, loans to non-UK/EU nationals totaled £3.24 billion; by 2024-25, this hit over £4 billion—a 40% increase. The SLC reports steady lending to UK nationals but surging demand from eligible foreign residents.

Repayment forecasts are grim: only 56% of full-time undergraduate loans from 2024/25 starters are expected to be fully repaid, with write-offs burdening taxpayers. EU students alone owe over £5 billion in unpaid debt. Reform UK labels this a 'ponzi scheme,' arguing universities lower entry standards for these students to boost numbers and revenue, exacerbating non-attendance and defaults, particularly in franchise providers.

Who Exactly Would Be Affected?

The policy would impact diverse groups integrated into UK society. EU families settled post-Brexit, numbering hundreds of thousands, rely on these loans for children's university access. Refugees granted status—over 100,000 Ukrainians and Afghans since 2022—and Commonwealth citizens with ILR would face barriers. Step-by-step, a typical affected student: (1) Gains settled status after 5 years (or less for refugees); (2) Applies to uni as home student; (3) Borrows via SLC; (4) Repays post-graduation or loan written off after 40 years.

This cohort contributes to campus diversity and pays home fees, cross-subsidized by international students. Excluding them could strain equality of access, conflicting with EUSS promises of parity with Brits.

Financial Implications for Taxpayers and Government

Proponents emphasize fiscal prudence. With total outstanding student debt exceeding £200 billion and annual write-offs around £10 billion, trimming £2-4 billion via the ban appeals amid budget pressures. Interest rates, capped at 6% from September 2026 due to inflation from global tensions, still generate losses as RPI-linked rates outpace repayments.

However, savings depend on non-repayment assumptions. If more settled students repay (higher UK employment rates), actual gains shrink. Reform's Brexit renegotiation to end EUSS home fees adds complexity, potentially sparking EU backlash.

Potential Ramifications for UK Universities

UK universities, particularly post-92s and urban colleges, enroll significant settled foreign nationals. A ban might deter this group, reducing home-fee income—though minor compared to £5+ billion from international fees. Amid 40% intl visa drop (visas fell from 600k to 415k 2023-24), further restrictions signal hostility, risking prestige and partnerships.

Institutions like Coventry, London Met face 'high risk' flags; job cuts (e.g., Nottingham's 600) loom. Positively, refocusing on domestic recruitment via apprenticeships could stabilize, but unis warn of access gaps for disadvantaged settled families. For more on uni finances, see Times Higher Education analysis.

Stakeholder Perspectives and Criticisms

While direct vice-chancellor responses are muted—sector wary of Reform's poll surge—groups like Universities UK stress international contributions (£41bn economic boost pre-visa curbs). Migrant advocates decry discrimination against integrated residents; NUS focuses on domestic reforms.

Critics note overseas visa students ineligible, questioning Reform's framing. Labour's Josh MacAlister counters by blaming Tory Plan 2 for defaults. Experts predict minimal uni revenue hit but symbolic damage to 'global Britain' branding.

• Pros: Prioritizes Brits, cuts waste.
• Cons: Hits vulnerable, ignores intl fee reliance.

Reform UK's Wider Higher Education Vision

Beyond loans, Reform advocates two-year degrees everywhere, slashing undergrad numbers, axing 'dud degrees,' and employer-led quality checks. Post-study visas restricted; health tourism ended. This apprenticeships-first approach mirrors skills shortages but challenges uni autonomy.

Government Responses and Ongoing Reforms

The Labour government probes franchise abuse, where settled students enroll minimally for maintenance cash. Student loan interest capped at 6%; thresholds frozen. For eligibility details, visit gov.uk student finance checker. SLC tightens overseas tracking, with 39% non-compliance among EU borrowers.

Photo by Yolanda Suen on Unsplash

Future Outlook and Strategic Considerations

If Reform surges in polls, unis must adapt: diversify recruitment, lobby for domestic funding uplift. Long-term, policy could spur efficiency but risks brain drain. Balanced reform—targeting fraud without blanket bans—may emerge, ensuring HE remains accessible and world-leading. Explore UK uni jobs amid changes at AcademicJobs higher ed jobs.