Student loans hope after Martin Lewis slams ‘horrible’ resolution for graduates
Chancellor Rachel Reeves has come under fire over her decision in the Budget to freeze the repayment threshold for graduates paying back Plan 2 student loans
Finance expert Martin Lewis has also demanded Rachel Reeves reverse her decision on loans thresholds(Image: Ken McKay/ITV/Shutterstock)
Keir Starmer has vowed to “look at ways” to make the student loans system “fairer”.
The PM appeared to distance himself from comments made by Rachel Reeves last month that the system is “fair and reasonable”. The Chancellor has come under fire over her decision to freeze the repayment threshold for graduates paying back Plan 2 student loans.
During Prime Minister’s Questions, Mr Starmer told Tory leader Kemi Badenoch: “We inherited their broken student loans system.
“We’ve already introduced maintenance grants to improve the situation, which they scrapped, and we will look at ways to make it fairer, and we will do other things within the economy to help students.”
Mr Starmer accused the Tories of scamming students and said Ms Badenoch had a “nerve” to criticise the Government after the Tories froze loan thresholds for 10 years.
READ MORE: PMQs RECAP: Furious Keir Starmer gets fired up as he slams ‘disgusting’ idea
Labour MPs have also been piling on the pressure, with many calling for ministers to make “urgent” changes. During a separate Westminster Hall debate, Helen Hayes, Labour MP and chair of the Education Select Committee, also supported calls for ministers to look at the loan system.
“I believe there is a need to look urgently at the value for money of student loans, and that we need to do that for the current Plan 2 generation, but we also need to do it for the future generation of young people who are considering university,” she said.
Finance expert Martin Lewis has also demanded Ms Reeves reverse her decision on loans thresholds. “Structurally, it’s horrible, it’s a breach of contract, it is not moral, Chancellor, you need to reverse that decision and give students what they were promised. The threshold needs to go up with average earnings,” he told ITV ’s Good Morning Britain on Monday after he said
Plan 2 loans were issued to English students who started their undergraduate courses between 2012/13 and 2022/23. Interest is added to their loans at the rate of Retail Prince Index (RPI) inflation, plus up to 3% depending on how much a graduate is earning.
At the Budget, Ms Reeves announced the repayment threshold would be frozen at £29,385 for three years from 2026. It means more graduates will start making repayments earlier than they would have if the threshold increased with inflation.
Ms Reeves was today challenged by broadcasters on whether any student loan changes could be included in the spring statement next Tuesday. “The spring forecast is just a forecast. We’ve committed to just one fiscal event, one budget, a year,” she said.
“What we will have next week at the spring forecast is an update in the forecasts for inflation, for interest rates, for Government borrowing.
“But I was really clear that I wanted to end the instability of budget after budget, mini-budget, fiscal events, that we had under the previous government, where we had five prime ministers and seven chancellors, and instead return the stability that is needed to our economy, so that businesses have the confidence to invest and families have the confidence to spend.”
