The new tuition fees regime in English universities could worsen a "haemorrhage" of taxpayer-funded loans to citizens of other European Union nations, as well as limiting institutions' ability to increase the lucrative fees charged to students from further afield.

Experts have warned that the trebling of the fee cap at English universities to ?9,000 from 2012-13 could lead to increasing losses for the taxpayer on loans to EU students, who are entitled to access the UK's publicly funded loans system.

If accurate, the predictions pose serious questions about the financial basis for the new fee regime. In 2009-10, the number of home students accepted by UK universities fell by 0.1 per cent while numbers from other EU states rose by 7.6 per cent.

Bahram Bekhradnia, director of the Higher Education Policy Institute, said it was "likely that many EU students will never pay back their loans", citing the impossibility of enforcing UK tax rules on individuals working outside its borders.

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He added that many new EU countries "are much poorer than we are, and so salaries will be much lower, and so first, many more students will fail to reach the ?21,000 salary threshold (at which repayment will kick in), and even when they do, with lower salaries many more will reach the 30-year forgiveness date without having repaid it all".

Figures from the Student Loans Company show that EU students' fee debt has risen to ?167 million, up from ?42 million in 2008.

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Joe Docherty, international director at the University of Portsmouth, said the extent of the "funding haemorrhage" to EU students was not yet fully appreciated.

Asked about the impact of higher fees on EU debt, he said: "It is going to be more of an issue. If you look at the size of debt owed by EU students to the UK, it has quadrupled in the past two years. Now we are going to treble fees."

Mr Docherty said that higher fees could lead to a drop in recruitment from countries such as France and Germany, where students are traditionally averse to fees. But this could be balanced by strong recruitment from Eastern Europe and nations such as Greece and Cyprus, which have dismal employment climates and a tradition of families helping with the costs of higher education.

Nicola Dandridge, chief executive of Universities UK, said any problem of recouping loans was "a matter for the government".

There is further uncertainty over universities' ability to continue to increase their income from non-EU students, whose fees can rise as high as ?26,000 a year.

Beatrice Merrick, director of services and research at the UK Council for International Student Affairs (UKCISA), said it was "unlikely that overseas fees will rise more steeply than they have in previous years, and if home fees are no longer subsidised, the argument for any kind of differential will come under pressure".

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However, Mr Docherty suggested that a differential would persist because higher recruitment and language training costs for non-EU students would remain.

john.morgan@tsleducation.com