More than 52,000 people have responded to a Commons Treasury select committee inquiry into student loans, with the vast majority describing interest rates and repayment terms as unreasonable. The committee chair, Meg Hillier, said the responses showed a 'massive scale of frustration and upset' that MPs must address.
The inquiry, launched amid growing pressure for reform, heard from graduates who described interest rates as 'extortionate' and 'higher than my mortgage'. Many said repayments acted 'like a tax on ambition', while others felt misled by promises that repayment thresholds would rise with inflation.
Of the 49,357 respondents who had taken out student loans, 92% said the level of interest and repayment terms were not reasonable, and 81% said the financial impact was worse than expected. More than half (57%) admitted they had not understood the terms and conditions before taking out their loans.
The controversy centres on 'plan 2' loans for students in England and Wales, where monthly repayments are often dwarfed by accumulating interest. The chancellor's decision to freeze the repayment threshold at £29,385 until 2030 has triggered accusations of mis-selling, as the original 2010 announcement promised annual uprating in line with earnings.
Official promotional materials from the Department for Education, released by the committee, repeated the claim that the threshold would be adjusted annually. Meanwhile, 2020 presentation slides gave examples of monthly repayments as low as £15 and £60, comparing them to costs for clubbing or mobile phone contracts.
A government spokesperson said steps had been taken to make the system fairer, including raising the repayment threshold for the first time since 2021 and capping interest rates at 6% from September. They emphasised that repayments are linked to income and any outstanding balance is written off at the end of the loan term.
