Nearly 200,000 students who dropped out of university are still repaying loans worth billions despite never having completed their degrees.
New data reveals that 191,500 people owe more than £5.9bn, and that figure is set to grow due to the added interest. Their repayment terms are identical to graduates and must still pay nine pc of income above £25,000.
The data – which covers those who took out a loan after 2021 in England, Wales and Northern Ireland – was obtained under the Freedom of Information Act by Teneo International School, an online learning platform for students aged 11-19.
Urgent Review Demanded
It comes as more than 120 MPs and peers have asked the chancellor to carry out an 'urgent review' of the student loan repayment system.
The debate has centred around Plan 2 loans, which were taken out by students in England between September 2012 and July 2023.
When they were first created in 2010, the plan 2 loan threshold was meant to be uprated with inflation each year, but it has been frozen on several occasions since 2016, leaving many graduates with mounting debt.
Dropout Rates and Debt
Approximately six to seven pc of UK undergraduates drop out before completing their degree. Of that number, 70 pc leave during their first year, according to the FOI data. First-year dropouts from 2020/21 now owe more on average – £30,044 – than those who left in 2024/25 – £26,149 – because interest keeps compounding.
Taryn Jankes, chief marketing officer at Teneo, told the Manchester Evening News: "It's quite frightening to be honest. We tell young people across the UK, go to uni, get a degree, get a well-paying job and you will be set for life. But this shows so many people are paying for a degree they don't have."
Jankes said a lot of young people have job insecurity, partly due to rapid advances in technology like AI, and don't feel going to university is 'worth the risk'.
She said while dropouts should pay back their loans, she advocates for a more flexible repayment plan.
Government Response
A Student Loans Company spokesperson told the iPaper that students agree to loan terms and conditions when they apply for finance, and that if they withdraw from study, they will enter repayment the following April 'in accordance with those terms'.
Pressure continues to mount on Labour, following Ms Powell's pledge last week that she will look into the 'egregious' student loans system.
Earlier this year, amid mounting criticism, Sir Keir Starmer's government announced that the interest rate for plan 2 loans would be capped at 6 percent from September to protect graduates from rising inflation.
The cross-party signatories, who have written to John Healey, have called for an 'urgent review', warning that the current setup places an 'unsustainable burden' on graduates.
The letter, co-ordinated by the campaign group Rethink Repayment, doesn't specify a particular plan they'd like to be reformed.
Last month, new Prime Minister Andy Burnham announced new and sweeping education reforms which will establish routes for year 10 students to 'combine core academic subjects' with technical education, work experience and apprenticeships in their area.
A spokesperson for the Department for Education told the Manchester Evening News 'around 9 in 10 undergraduates complete their course and that it is 'only fair' they should repay their loans.
The spokesperson added: "However, it is clear that young people need to be given real choices from the start, so they can make informed decisions about their future and avoid ending up on a course that is not the best match for their goals."
