The move, revealed today in an email to institutions, will add to worries that an overspend on private providers has caused a major budget crisis at the Department for Business Innovation and Skills.
Universities with direct public funding will also be concerned that they are now being directly impacted by a problem that began in private colleges.
Some in the private sector immediately raised questions about whether the move could be judged as discriminatory to affected students under EU law.
Today’s email from the Student Loans Company says: “We are writing to advise you that Student Finance England (SFE) have taken the decision, in consultation with the Department for Business Innovation and Skills (BIS), to suspend all elements of funding to EU students at alternative providers and all A2 nationals (e.g. students from Bulgaria and Romania) at a public institution for 13-14 payments.”
BIS has since clarified that the funding suspensions do not affect students claiming fee loans only.
The funding suspension for EU students does not apply to those from the UK.
Today’s move suspends tuition fee loans for 2013-14 for the relevant groups of students, as well as maintenance loans and grants, subject to students supplying additional information about whether or not they are eligible for funding.
The suspensions will apply for all students in the relevant categories, even if they are already studying in the UK and no matter what stage of their degree they are at.
A BIS spokesman confirmed: “All EU students at alternative providers have had payment suspended until they provide the additional information outlined in the letter.
“All Romanian and Bulgarian at all institutions (APs and universities) have had payments suspended until they provide the additional information.”
Students would receive funding “as long as they supply that additional information”, he said.
Asked how many students were affected, the BIS spokesman said: “We do not have full numbers at the moment, data is still be compiled.”
The SLC email says student support regulations “state that a student must have been ordinarily resident in the United Kingdom throughout the three-year period preceding the first day of the first academic year of the course to be eligible to receive a maintenance loan or grant”.
It adds: “We have contacted all students concerned and have asked for further evidence of their eligibility to receive maintenance loans or grants.”
The move follows a written ministerial statement on student support last week by David Willetts, the universities and science minister.
