Francesca Peters, 27, graduated with over £60,000 in undergraduate debt, but a master's loan pushed her total to £77,000. 'It just feels like a life tax,' she says, 'because I’m never going to pay it off.' Peters is among a growing number of UK graduates calling for reform of the student loan system, with postgraduate loans facing particular criticism.
Postgraduate Loan Terms Under Fire
The postgraduate loan repayment threshold has remained frozen at £21,000 since 2016, while undergraduate plan 2 loans kick in at £29,385. Postgraduates pay 6% of earnings above the threshold, compared with 9% for plan 2, but interest accrues at RPI plus 3% – currently 6.2%, capped at 6% from September. Graduates with both loans face two separate monthly deductions.
Oliver Gardner, founder of campaign group Rethink Repayment, says: 'The terms for the postgraduate loan are some of the most egregious out there. Because the repayment threshold is so low. And the interest rate that can be charged is always so high.'
Rising Debt and Stagnant Wages
Student Loans Company figures show total outstanding student debt in England jumped 10.5% to £294.6bn in 2025-26, with £12bn of the £28bn increase from accrued interest. Postgraduate lending rose 8.7% to £800m last year, with roughly £8bn of the near £300bn total relating to postgraduate degrees.
Mariella James, 22, completed a master's in sustainability and management at the University of Bath and now works as a social media manager. About £60 is deducted monthly for her master's loan, plus £15 for her undergraduate debt, bringing her total owed to £60,500. 'I choose not to look,' she says.
Graduates Feel 'Trapped' by System
Peters, who completed a master's in bioinformatics at Cranfield University, has repaid £3,067 over four years, but her balance increased due to £3,186 in added interest. 'They’ve designed the system so that, basically, you’re trapped,' she says. Gardner adds: 'The big feeling is that – if you have both an undergraduate and a postgraduate loan – the financial burden is so significant that it’s holding them back.'
Rethink Repayment calls for the repayment threshold to keep up with wages, interest capped at inflation, and the plan 2 repayment rate lowered to 5%. Peters suggests postgraduate loans should be interest-free: 'We want to repay these loans … but if they’re charging these outrageous interest rates, then you’re just fighting an endless battle.'
Calls for Urgent Reform
James argues master's fees should be lowered to prevent excluding students from certain backgrounds. She felt like the 'odd one out' on her course as few peers needed loans. The current system, she says, 'is just tripping people up before they can really do anything with their lives.'
A Department for Education spokesperson said: 'We’ve raised the repayment threshold for plan 2 loans for the first time since 2021 and have capped maximum interest rates for plan 2 and postgraduate loans this year to protect graduates from rising costs. Graduates – especially those with postgraduate degrees – generally benefit from higher earnings, and repaying their loan is fair for those workers who have not gone to university or graduates on lower salaries.'
