Treasury Committee Scrutinises England's Student Loan System Amid Public Discontent
The Treasury Select Committee of MPs began its inquiry into England's student loan system on Tuesday, receiving evidence from student organisations and financial experts.
This scrutiny arrives as new data from the British Social Attitudes survey reveals a significant shift in public perception, with 34% of people in 2025 believing a university education "just isn't worth the amount of time and money". This figure marks a substantial increase from 14% in 2005 and represents the highest level of concern recorded in 20 years.
Graduate Debt and Repayment Challenges
Graduates holding Plan 2 loans, issued between 2012 and 2023, are particularly affected by accumulating interest that frequently outpaces repayments. One graduate, Gemma, detailed how her initial debt of £34,105 in 2016 has escalated to £41,908 despite consistent repayments. She articulated the experience as "draining" and akin to "climbing a mountain", impacting personal decisions such as delaying starting a family.
The National Union of Students (NUS) urged the inquiry to focus on the graduate earnings repayment threshold and prevailing interest rates. The government's decision to freeze the repayment threshold at £29,385 from April 2027 for three years is a point of contention, with critics arguing it contravenes the original terms of student loans and will force more graduates into earlier repayments.
More than 50,000 individuals have submitted written evidence to MPs, with many expressing that they did not fully comprehend the loan terms upon signing. While Universities UK acknowledged labour market challenges, it asserted that graduates are more likely to secure employment, earn higher wages, and enjoy improved health, underscoring the broader societal benefits of higher education.
The government has defended its policies, stating the current system safeguards lower-earning graduates through income-linked repayments and loan write-offs after 30 years. It also noted recent adjustments, including raising the graduate repayment threshold since 2021 and reintroducing targeted maintenance loans, alongside capping Plan 2 loan interest rates at 6%.
