A former government education review chair has drawn a stark comparison between the student loan system and the Payment Protection Insurance (PPI) scandal, labelling changes to Plan 2 loan terms a “moral issue”. Sir Phillip Augar, who led a review into post-18 education, said the terms of Plan 2 loans were not adequately explained to students, suggesting that both financial services organisations and the government have a “duty of customer care” that was not met.
Growing criticism of student loan system
The criticism follows the chancellor’s decision in the autumn 2025 budget to freeze repayment thresholds for three years. This move is expected to push more graduates into higher repayment bands, increasing their monthly payments. Experts, including Kate Ogden from the Institute for Fiscal Studies, have condemned the government’s “egregious tinkering” with loan terms, particularly unannounced freezes to interest rate thresholds.
Public confidence declines
Public confidence in the value of a university education has significantly declined. A record 34 percent of people now believe that a degree is not worth it, amid concerns over mounting student debt and reduced graduate job prospects. Sir Phillip Augar’s comments highlight the growing unease about the fairness and transparency of the student loan system, drawing parallels to the widespread mis-selling of PPI.
The comparison to the PPI scandal, which saw banks and other financial institutions compensate customers for mis-sold insurance policies, underscores the scale of the issue. Augar emphasised that the lack of clear communication about loan terms represents a failure of duty, and that the government must address the moral implications of its policies.
