Graduates burdened with soaring student loan debts feel they are being treated as “cash cows” to fund policies benefiting older generations, MPs have heard. During a Treasury select committee inquiry, student representatives described the “harrowing” impact on young people, while the author of the 2019 government review into post-18 education likened the system to the payment protection insurance (PPI) and car finance mis-selling scandals.
Philip Augar, who led the review, criticised what he called “almost sneaky” changes to loan terms, noting that borrowers signed up for conditions that were “not properly explained”. He said the government had a duty of care similar to financial services firms, and that retrospectively altering terms was morally questionable. When asked if the Financial Conduct Authority would intervene if a bank behaved similarly, Augar drew parallels with the PPI and car loan scandals.
Ollie Gardner, founder of Rethink Repayment, described an “intergenerational crisis”, citing a 33-year-old NHS doctor who had already accrued £38,000 in interest and faces repaying two to two-and-a-half times the original loan. He accused the government of using graduates as “cash cows” to generate tax revenue, specifically pointing to the freeze of the repayment threshold at £29,385 until 2030, which he said fuels anger.
The controversy was ignited by Chancellor Rachel Reeves’s decision to extend the freeze on the plan 2 loan repayment threshold, above which graduates pay back 9% of earnings. Above-inflation interest rates on these loans have also drawn criticism. In response, a government spokesperson said steps had been taken to make the system fairer, including raising the threshold for the first time since 2021 and capping maximum interest rates, while noting that lower-earning graduates are protected and balances are written off after the loan term.
