More than 52,000 people have responded to a parliamentary inquiry into student loans, with the chair of the Commons Treasury select committee describing a 'massive scale of frustration and upset' among graduates. The inquiry, launched amid growing criticism of loan terms, has heard from graduates who described interest rates as 'extortionate' and repayment conditions as 'like a tax on ambition'.
The controversy centres on 'plan 2' loans taken out by students in England and Wales. Many graduates report that monthly repayments are dwarfed by accruing interest, causing their total debt to increase. The trigger for the latest outcry was the chancellor's decision to freeze the salary repayment threshold at £29,385 until 2030, despite earlier promises it would rise with earnings.
Of the nearly 50,000 respondents who took out student loans, 92% said the interest and repayment terms were 'not reasonable', and 81% said the financial impact was worse than expected. More than half admitted they had not understood the terms before borrowing. One respondent said they were told repayments would be 'less than a phone bill' but now pay hundreds of pounds monthly.
Meg Hillier, chair of the Treasury committee, said MPs must listen to the 'powerful' feedback. The freeze has prompted accusations of mis-selling, as the 2010 coalition government had promised annual uprating in line with earnings. Official promotional materials from the Department for Education repeated that claim, while 2020 slides gave examples of repayments as low as £15 and £60 per month.
In response, a government spokesperson said they inherited the system and have taken steps to make it fairer, including raising the repayment threshold for the first time since 2021 and capping interest rates at 6% from September. They added that the system protects lower earners, with repayments linked to income and balances written off after the loan term.
