US EditionStudent loan system 'fair and reasonable', says Reeves
Chancellor Rachel Reeves says the freeze aligns repayment plans and ensures higher earners contribute more, affecting 5.8 million Plan 2 borrowers with loans accruing significant interest.
- In her November Budget, Chancellor Rachel Reeves defended freezing the Plan 2 repayment threshold, insisting the change was fair and proportionate.
- Plan 2 loans date to 2012 when tuition fees were trebled by the Conservative-Lib Dem government, applying to 5.8 million borrowers in England and Wales from September 2012 to July 2023 with RPI plus up to three percentage points interest.
- Graduates on Plan 2 repay 9% of earnings above the threshold, with payments collected automatically through the tax system and interest at RPI plus up to 3%, reaching 6.2% for someone earning 51,245.
- Critics warn the freeze will increase repayments for workers earning above the Plan 2 threshold and fuel anger, as House of Commons Library data showed more than 51,245 in interest added in 2024-25.
- The UK government figures show total student debt has risen to £270 billion, with only half expected to be repaid and loans written off after 30 years.
5 Articles
5 Articles
Why the student loan scandal could be Labour's next U-turn
In what is rapidly becoming a contested field, Rachel Reeves might just have made her biggest mistake yet. Last week, the Chancellor defended the scandalous student loan system introduced by the Conservatives, insisting that the policy of young graduates having to pay back far more than they borrowed in the first place, even if they are far from wealthy, is “fair and reasonable”. In doing so, she sent a loud and clear message to the millions of …
Rachel Reeves tells LBC student loan system is 'fair' amid fury as graduates rack up thousands of pounds of debt interest
5.8 million people who took out a student loan between 2012 and July 2023 are on a Plan 2 repayment plan, which sees interest at RPI inflation - plus up to three per centage points depending on earnings.
Britain's Broken Promise - How Student Loans Became a Lifetime Sentence
The UK student loan system is facing major upheaval in 2026. Tuition fees are rising, repayment thresholds are shifting, and a new "Lifelong Learning Entitlement" is launching all while many borrowers face high interest rates and confusing repayment terms.
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