Political controversy over rising international student debt

Reports of mounting debt among international students have sparked controversy. Although student debt among graduates outside Denmark is primarily that of Danish citizens who have left, debt among international students is high and there are concerns that government action might reduce their numbers in future.

On 16 January 2023 the Danish Broadcasting Corporation reported that foreign citizens’ student debt to Denmark had increased from DKK800 million (US$115 million) to DKK1.3 billion (US$186 million) over three years.

This news, and a document prepared by the Ministry of Taxation titled “Educational statistics – SU to EU citizens with report on expenses for migrant workers”, created headlines in newspapers around the country and led to a number of questions in parliament. (In Denmark the State Educational Grant and Loans Scheme for students is known as SU.)

MPs from the Danish People’s Party and the Denmark Democratic Party posed questions on what measures the ministry would take to collect the outstanding debts and asked for statistics on the nationality of those students who left Denmark without paying their debt.

The tax ministry reported that 18,000 former students had amassed this outstanding debt and that 5,000 of these had left Denmark without forwarding an address abroad.

Questions in parliament

The report led to several questions in parliament to both Minister of Taxation Jeppe Bruus and Minister of Higher Education and Science Christina Egelund. Parliament is set for a meeting on 23 February between the two ministries to debate the issue of what to do with the outstanding debts.

The ministers have been asked to report to parliament on what concrete measures they will take to have the debt incurred by international students paid back, and what they will do to halt the accumulation of more debt.

On 17 January MP Nick Zimmermann from the Denmark Democrats, a centre-right party, addressed this question to the immigration and integration minister: “Will the minister introduce a prohibition of entry to Denmark on persons from third countries having SU debts that [are] not activated for payback to Denmark?”

On 6 January Hans Kristian Skibby of the Denmark Democrats asked the higher education minister if it was possible to make it compulsory that a student would only receive Danish student loans when the student comes from a country with which Denmark has an agreement of debt collection. If this is not possible, it was also asked, should it should be stated on which grounds this is the case?

On 18 January Zimmerman referenced an article on the website suggesting that foreigners are running away from the SU bill, and that the debt had increased to DKK1.3 billion.

He asked whether Minister Egelund would “send us a table on the nationality of the 13,000 living in Denmark and the 5,000 departed foreign citizens with overdue debt with information if the debt is SU loans?”

Extensive answers from government

Extensive answers to all the questions were given by the minister.

After supplying a long list of the international agreements Denmark has signed, the minister concluded that it was not possible to make the SU loan conditional on an international student coming from a country where Denmark has an agreement for collecting debts.

To the question of whether a foreign citizen could be refused entry into Denmark due to outstanding SU debt, Egelund said that this was against international law.

Asked by Zimmermann if the minister, within European Union law, would rearrange the SU system so that citizens from other EU countries cannot run away from their student debts, Egelund replied: “I do not recognise the picture [drawn by Zimmermann] that foreign citizens should run away from their SU bill.”

The fact is that debt holders who leave Denmark repay their debts to a lesser degree than debt holders living in Denmark: 64% of debt holders leaving compared to 32% living in Denmark have not paid their debts.

But foreign citizens are not over-represented in the group of those leaving and not paying – on the contrary, 65% of them have Danish citizenship.

The table of nationalities requested by the MPs was published in table 1 and 2 of this document (in Danish).

The nationality of the international students from the EU countries and other countries that have not paid their student debts are (number of students): Germany (755), Iceland (414), Romania (380), Lithuania (245), Syria (230), Bulgaria (205), Somalia (180), Hungary (175), Poland (175) and Slovakia (170).

The total number of debt-holders that have left Denmark is 5,030 and the total outstanding debt they have is DKK353 million.

With regard to debt-holders still living in Denmark who did not start paying their debt when due, the 10 largest nations are different: Somalia (1,090), Turkey (900), Iraq (885), Syria (835), Afghanistan (670), Poland (450), Bosnia-Herzegovina (425), Iran (425), Germany (370) and Romania (365).

The total numbers of debt-holders having mishandled their repayment of loans is 12,755 and their outstanding debt is DKK953 million.

More international students demanded

As reported by University World News, universities and Danish business and industry are strongly urging the government to increase the numbers of international students due to strong demand in the workforce.

The Danish Society of Engineers’ report on Value of International Graduates for the Economy: With focus on technology and natural science graduates, conducted by DAMVAD Analytics, analysed the economic contributions of nearly 20,000 graduates between 2007 and 2016.

European Court of Justice ruling in 2013

The number of citizens from EU member countries receiving funding from the State Educational Grant and Loans Scheme grew more than 27-fold from 2012 to 2021 – from 441 to 12,200.

This followed a ruling in the European Court of Justice in 2013 that the Danish authorities should pay grants to European students who earn an income in Denmark, either as ‘EU migrant workers’ or ‘self-employed’. They are entitled to tuition free education and SU grants and loans – of DKK6,321 (US$911) per month before taxes – provided that they work no more than 10 to 12 hours a week.

The majority parties in parliament in 2013 agreed to cap the total amount of SU support to migrant EU workers at DKK442 million. If the cap was reached, the agreement should be re-negotiated.

Reductions in English-taught degrees

A forecast in 2018 said that with the present expansion the total number of EU students applying for SU support as migrant workers would exceed 15,000 in 2023 at a cost of DKK650 million.

This led to cuts in student numbers: firstly 1,000 university students in 2018 and then 3,900 students at the business academies in 2021. The reductions were in English-taught degrees. This led to a reduction in SU expenses to DKK505 million in 2022, with an estimate of DKK465 million in 2023, down to DKK405 million in 2026.

The issue of retaining the SU-supported degree students in the workforce has also not been a success. In 2008 there were 1,946 students graduating with an English-taught degree, while in 2018 this had increased to 7,335 – by 277%.

In the same period the number of employed graduates from English-taught degrees fell from 37% to 30% and the number of graduates from these programmes leaving Denmark increased from 39% to 41%.

On 23 February there will be a hearing with the minister of taxation and the minister of higher education in parliament on how to collect some of the outstanding debt international students owe to Denmark.

Comment on possible impacts

University World News asked Asbjørn Boye Knudsen, now with Amsterdam Data Collective Denmark, who was head investigator of DAMVAD Analytics, which analysed the economic contributions of nearly 20,000 graduates between 2007 and 2016, about the possible negative impacts of these developments on international student intakes in future.

Knudsen said: “That will of course depend on what kind of measures they take. If they just increase efforts to collect the debt, I don’t think so. I don’t believe that most students are planning to default on their debt when they apply. This is also shown by the fact that Danish students have larger debt than international students.

“If they make it a lot more difficult administratively to get access to loans in the first place, it might affect intake since it makes it less attractive and more difficult to afford the studies.”

Head of education and research policy at the Danish Chamber of Commerce, Mads Eriksen Storm, told University World News: “Of course, international students – as well as Danish [students] – should pay their debt. We look forward to [hearing] more about the government’s effort in this case.”

Jesper Langergaard, director of Universities Denmark, commented to University World News: “It goes without saying that foreign students should pay their debt, just as Danish nationals should. However, foreign university students do contribute both to the universities and to our society as a whole in a scenario where the benefits far outweigh the costs.

“So, I cannot see why this rationally should be a major obstacle for increasing the number of foreign students at Danish universities.”