Taxpayers will have to absorb a bill of at least £50m a year to subsidise grants and loans for students from other European Union countries, the Conservatives claimed yesterday.

According to reports in The Daily Telegraph, European students must be treated the same as British students under EU law. This means they will be given subsidised loans for their fees and be eligible for maintenance grants if they have lived in Britain for three years before starting their studies.

The Conservatives said in the Telegraph that the grants would be 'misdirected' if they went to EU students, because British undergraduates were struggling to find the £3,000-a-year top-up fees coming in from September next year.

Education officials admitted earlier this year that there was currently no way to recoup money from EU students who returned home.

Stephen O'Brien, the shadow minister for higher education, said that in addition to the risk of bad debts, the cost of subsidising the loans to EU students would be at least £40m a year.

Some 5,000 full-time EU students could also be eligible for help with living costs after a ruling yesterday by the European Court of Justice that they would be eligible for maintenance grants if they had lived in Britain for three years before starting their studies.

It is estimated that this will cost about £10m to fund in the first year, rising to £30m by the end of the three-year degree cycle.

Meanwhile, a recent survey by the National Westminster Bank has found that the average UK graduate debt has gone up from £12,180 last year to £12,640 this year.