Keir Starmer cleared the way for his 15th U-turn on Wednesday as he hinted at a climbdown over the crippling interest rates charged on student loans.
The Prime Minister said ministers are examining ways to make the student loans system ‘fairer’ following an outcry over the punitive charges.
Whitehall sources said proposals included moving away from the outdated Retail Prices Index measure of inflation when calculating loan interest charges.
The move came just days after Kemi Badenoch unveiled Tory proposals to slash the interest payments on loans.
The backlash over student loans has intensified since the Budget when Rachel Reeves announced she was freezing the threshold at which repayments start at £29,385 for three years.
The Chancellor last month insisted the student loans system was ‘fair and reasonable’.
But speaking in the Commons on Wednesday, the PM said ministers would now ‘look at ways to make it fairer’.
If there is a change in policy it would mark yet another U-turn by the Starmer Government on fiscal matters.
The Prime Minister, pictured in the House of Commons on Wednesday, said ministers are examining ways to make the student loans system ‘fairer’ following an outcry over the punitive charges
Kemi Badenoch unveiled Tory proposals to slash the interest payments on loans in recent days
In the Commons, Mrs Badenoch said the system was at ‘breaking point’, adding: ‘It is time for all of us to do something about it.’
The PM claimed the Conservatives had ‘broken’ the loan system.
He said ministers were now looking at options to ease the burden, but repeatedly refused to say what action would be taken.
Anger has been growing at the high rates on so-called ‘Plan B’ loans brought in by the Coalition government.
Interest is charged at the rate of RPI inflation plus up to 3 per cent, depending on salary, and many former students say their debt is rising despite being in well-paid jobs.
The maximum rate is currently 6.2 per cent, almost double the 3.2 per cent rate of inflation as of September 2025.
The Treasury and Department for Education are discussing reversing the threshold freeze or lowering the interest rate.
In a question and answer session with online ‘influencers’, Sir Keir acknowledged that the scale of the debt would ‘put some people off going to university’.