Powell says student loan system at top of in-tray
Summary
Lucy Powell, the new UK education secretary, said she wants to make the student loan system fair and will review it, especially the high interest rates on Plan 2 loans. She expressed concern about how the current repayment rules affect graduates and acknowledged it as a serious issue but did not promise changes.Key Facts
- Plan 2 loans were taken out by English students between 2012 and 2023 and continue in Wales.
- Graduates repay 9% of earnings above a set threshold.
- The repayment threshold will be frozen from 2027 to 2030, meaning repayments start earlier and grow as salaries rise.
- Interest on some loans, including Plan 2, will be capped at 6%.
- Lucy Powell called the current interest rate (Retail Prices Index plus 3%) "egregious."
- Powell's eldest child has a Plan 2 loan, making her familiar with the issue.
- The government previously compared student loan repayments to £30 monthly phone contracts in presentations to teenagers.
- Conservative leader Kemi Badenoch proposed capping interest rates on Plan 2 loans at RPI only, currently 3%.
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