More than 52,000 people have responded to a Commons Treasury select committee inquiry into student loans, revealing widespread frustration and upset over loan terms. The committee chair, Meg Hillier, described the response as showing a 'massive scale of frustration and upset'.
Of the 49,357 respondents who took out student loans, 92% said the interest rates and repayment terms were not reasonable, and 81% said the financial impact was worse than expected. Over half (57%) admitted they had not understood the terms and conditions before taking out their loans.
The inquiry follows controversy over the government's decision to freeze the salary threshold for Plan 2 loan repayments at £29,385 until 2030. This threshold, above which graduates repay 9% of earnings, was previously expected to rise with inflation. Critics accuse the government of mis-selling, as Plan 2 was originally announced with assurances of annual uprating in line with earnings.
Many graduates reported that their monthly repayments are dwarfed by accumulating interest, with some calling the rates 'extortionate' and 'higher than my mortgage'. One respondent said the repayments acted 'like a tax on ambition', while another claimed they were told repayments would be 'less than a phone bill' but now pay hundreds of pounds a month.
The government has defended the system, pointing to a cap on interest rates at 6% from September and the reintroduction of targeted maintenance grants. A spokesperson said the system protects lower-earning graduates, with repayments linked to income and any outstanding balance written off at the end of the loan term.
