Under proposals announced on 1 September, non-UK EU students would have to live for five years in the UK before they became eligible for loans or grants to help with their living costs ¨C instead of the current three-year requirement.

The changes are designed to ¡°[bring] the rules regarding living cost support for EU students in line with the rules applied to visiting students in other EU countries¡±, said Mr Clark in a foreword to a consultation paper published by the Department for Business, Innovation and Skills.

Its publication follows concerns over the potentially massive cost of providing loans and grants to thousands of extra EU students who may arrive at UK universities when student number controls are abolished in 2015-16.

The number of EU undergraduates accepted by UK universities is up 9 per cent this year compared with 3 per cent for students from England, according to latest Ucas figures.

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Students from Romania, Hungary, Portugal and France are likely to be proportionally most affected by the change, the consultation says.

According to the BIS report, the total paid to EU students via loans and grants has already soared in recent years, rising from ?75 million in 2009-10 to ?162 million in 2012-13.

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The majority of payments in 2012-13 related to maintenance loans (?101 million), but EU students who returned to the continent are only half as likely to pay back their loans as UK graduates, with just 24 per cent either fully repaying or partially repaying their debts in 2011.

¡°EU borrowers are more likely to have failed to supply details of their income and are more likely to have been placed in arrears than English borrowers,¡± the consultation says.

In addition, EU students receive more support in loans and grants on average than UK students because they are more likely to be aged 21 or over and from poorer backgrounds, the paper says. They are more likely to receive the maximum amount in means-tested support, as well as other grants to help with the costs of childcare, parenting duties and dependant adults, it adds.

According to the BIS analysis, the Treasury would make ?7 million in annual savings if 1,000 EU students were not allowed to receive loan or grant support.

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That would rise to ?14.6 million a year if they decided to forgo higher education in the UK at all ¨C as the Student Loans Company would not need to cover the cost of their tuition fee loans.

According to the paper, some 33,900 EU students received tuition fee support in 2012-13, up from 31,700 in 2011-12.

The consultation does not propose changing the rules which say EU students must have the same access to tuition fee loans as UK students.

The proposed changes would be effective from 2016-17 at the earliest and would not apply to those with settled status, such as refugees.

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jack.grove@tesglobal.com