Student loan repayment rates an 'unsustainable burden', chancellor told
Summary
More than 120 UK politicians have asked the chancellor to urgently review the current student loan repayment system, saying it places a heavy financial burden on young workers. The main concern involves Plan 2 loans taken by students in England and Wales, as rising repayments and fixed thresholds make paying off these loans harder for many graduates.Key Facts
- Over 120 MPs and peers signed a letter calling for a review of the student loan repayment system.
- The letter was coordinated by the campaign group Rethink Repayment and includes politicians with Plan 2 loans.
- Plan 2 loans affect students in England from 2012-2023 and still apply in Wales; repayments start when income passes a set level, at 9%.
- The repayment threshold for Plan 2 loans is frozen at £29,385 from 2027 to 2030 instead of increasing with inflation.
- This freeze means graduates will start repaying earlier and pay more as their salaries rise.
- Many middle-income earners see less than half of their pay rises after taxes and loan repayments.
- The Treasury committee criticized past government comparisons of loan repayments to cheap phone contracts, calling it misleading for higher earners.
- MPs voiced concern that changing loan terms after borrowers signed up is unfair.
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