More than half of students who took out loans to fund their degrees did not fully understand the terms and conditions of repayment, according to a parliamentary inquiry. The Treasury Committee received over 52,000 responses to its call for evidence on student loan experiences, one of the highest response rates ever recorded for a select committee inquiry.
Key Findings from the Inquiry
Of the 49,357 respondents who had taken out student loans, 28,275 admitted they did not understand the terms and conditions beforehand. The inquiry was launched after campaigners highlighted how spiralling inflation has left graduates unable to make progress on their repayments, which are tied to the retail price index (RPI) plus up to three percentage points depending on income.
Graduates previously told The Independent that under the current system, they will never be able to pay off their loans. Pressure on the government to reform student loan repayments has grown since Chancellor Rachel Reeves froze the repayment threshold in the November Budget.
Financial Impact and Future Planning
Among respondents who had taken out a loan, 40,373 said the financial impact of repayments combined with tax was worse than expected, and 45,843 considered the interest and repayment terms unreasonable. Many young people feel their debt is holding them back from key milestones: 34,555 said repayments materially affected their financial planning for the future.
More than 25,000 respondents said they would not take out a student loan again, though 45,066 stated they could not have attended higher education without one.
Committee Chair's Response
Treasury Committee Chair Dame Meg Hillier acknowledged the “massive scale and strength of frustration and upset.” She stated: “Let me say very clearly to those who filled out our survey: the message has landed with the committee. While not everyone has had a bad experience, the massive scale and strength of frustration and upset is powerful and, as MPs, we must listen.”
She added: “It’s imperative for the prosperity of our country that people currently in their 20s and 30s feel incentivised to work hard and build successful careers. Unfortunately, what these findings tell us is that far too many young people feel overburdened and demoralised by their student debt. My committee will now spend the coming weeks looking at the different options available to the government before making some recommendations for change.”
Campaign Group Reaction
Ollie Gardner, founder of campaign group Rethink Repayment, said the results show the student loans system “urgently needs reform.” He commented: “The Treasury Committee's survey sends a clear message to politicians: the punitive student loan system is holding young people back, and it urgently needs reform. It should deeply concern all of us that student loan repayments are having such a significant impact on young people’s finances. They are preventing many from reaching key life milestones such as buying a home, starting a family and saving for retirement, simply because they chose to pursue higher education. To avoid the long-term economic consequences of holding back an entire generation, Rethink Repayment is urging politicians to reform the system. Millions of young people’s ability to build a future in the UK depends on it.”
Government Response
A Department for Education spokesperson acknowledged graduates have “concerns” about loan repayments but insisted the system “protects lower-earning graduates.” They said: “We inherited the current system and have taken steps to make it fairer – including raising the repayment threshold for the first time since 2021 and capping maximum interest rates this year to protect graduates from rising costs. We have also reintroduced targeted maintenance grants to expand opportunities for people from all backgrounds to go to university or college. The student finance system protects lower-earning graduates, with repayments linked to income and any outstanding balances and interest written off at the end of repayment terms.”
