Student Finance (Review of Payment Schedules)

1st reading
Wednesday 7th January 2026 Commons Chamber

Motion for leave to bring in a Bill (Standing Order No. 23)

12:40

[Mr Luke Charters (York Outer) (Lab)]

I beg to move,

That leave be given to bring in a Bill to require the Secretary of State to review the scheduling of student finance payments to undergraduates; to require the review to consider advance provision of certain student finance payments in certain circumstances; and for connected purposes.

Today, I introduce the Student Finance (Review of Payment Schedules) Bill. A former civil servant—one of the designers of the current student finance system—once told me that the loan system has become a Frankenstein’s monster. Maintenance loan payment dates simply do not line up with the reality of students’ lives. Rent and bills are due monthly but student finance arrives in infrequent, uneven chunks, forcing students to budget against uncertainty or rely on overdrafts simply to get by.

The system assumes a level of financial resilience that many students simply do not have—and even once students graduate, the problems just do not stop. Repayment is needlessly complex and riddled with ludicrous features, such as charging higher interest rates to those who go on to earn more. The result is a system that adds stress during study, confusion after graduation and long-term financial insecurity for an entire generation. As one of the youngest MPs, who is still repaying a plan 2 loan, I recognise many of those challenges.

I work with the University of York students’ union, whose representatives are sat in the Public Gallery, on cost of living issues such as bus fares for students locally. Today’s Bill, however, seeks to make student finance work better for the over 2 million undergraduate students in this country, and it would build on the work of this Labour Government to reintroduce targeted maintenance grants for students from the lowest income households. We need to change the way maintenance loans are distributed. Scotland’s student finance system administers monthly maintenance payments. Long story short, that is the model that needs to be explored for England and Wales. It comes at no extra cost and is a no-brainer.

Many students face financial strain because maintenance loans are paid termly. For a student receiving the maximum £10,200 outside London, that creates three lump-sum payments of approximately £3,400 each. Let us imagine receiving four months of salary all at once; that is the system we expect students to navigate. Many are at the point in their lives when they are still learning those essential budgeting skills. The termly payment schedule fuels cash-flow challenges, leading to students maxing out overdrafts—nearly one in three with an overdraft have maxed out their facilities at some point—and creating problem debt, pushing them to other forms of credit simply to get by.

There is also a particularly acute pressure point as students transition between years at university, when rent deposits are due before their student finance payments arrive. Students should not be pushed into financial worry, especially after a stressful period of sitting their exams, simply because of a payment scheduling mismatch. That is why I believe that we should move to monthly payments. Not only would it give students greater financial stability and reduce stress, but it would better reflect the world of work once students leave uni and start getting their first full-time payslips. For second and third-year students, being able to access finance from July, when rent often begins, would be genuinely transformative.

At the moment, we force families to step in, or we force students who do not have that safety net into overdrafts. Student finance can also act as a barrier for working-class students from the moment they get their A-level results because of the up-front costs before they even go to university. Pots and pans, rent deposits, books, software, travel passes, course subscriptions—the costs all stack up. The reality is that by the time a student sets foot in their first lecture, they have already navigated a stressful and uneven financial landscape.

I heard of a student who could not afford the train ticket to get to university because their student finance had not arrived. Starting uni should be memorable, not miserable. Another student who was a care leaver wrote to me saying that they had experienced the “just about coping” stage at first hand. They recalled the “genuine terror” of not knowing how they would pay their rent because their loan had not landed. Research by Student Minds, covered by the Money and Mental Health Policy Institute, showed that nearly half of students felt the rising cost of living was impacting their mental health.

The simple but transformative fixes I have outlined today would make a huge difference, and student unions across the country, including the National Union of Students, agree. Just some of the SUs that are backing my Bill include Manchester, University College London, Leeds, Birmingham, Exeter, Sheffield, Liverpool, Greenwich, Newcastle and Bath Spa, and these represent around 350,000 students. When we add in Durham, Derby, Bath, Buckinghamshire, Staffordshire, Lancaster, Essex, Leeds Trinity, Chester, Royal Holloway, Bradford, Roehampton, Worcester, the University of Law, Winchester, University College Birmingham, Liverpool Hope, the Arts University Bournemouth, Buckingham and of course York, we have student unions representing a third of all the students in the country supporting this Bill and these small tweaks today. Thank you! I am still getting letters of support even now. I want to give special thanks to Amira Campbell, the president of the NUS, who is also backing my Bill. She says:

“Student finance is in dire need of reform and a review into the payment plan is a great place to start. We’d strongly support this review and a move to monthly payments which would allow students to better budget their income, particularly over the summer where bills come in, but their income does not.”

Just briefly on loan repayments, plan 2 borrowers, including me, were never clearly told that higher graduate earnings meant higher loan interest. As a former Financial Conduct Authority regulator, I can tell the House that, although the regulations do not apply to student loans, my honest view is that the communication around student loan repayments, where income is linked to interest rates, feels like a mis-selling scandal waiting to unfold.

In summary, the under-30s have been forgotten about in British politics for far too long. You may not believe it, Mr Speaker, but it was only a few months ago that I left that age group—

[Adam Jogee (Newcastle-under-Lyme) (Lab)]

Surely not!

[Mr Charters]

Yes, I know—my grey hair and tired eyes from my two amazing young boys make me look just a little bit older. It is this Labour Government who are giving younger people a better deal: votes at 16; better wages and rights for student workers; and bringing back targeted maintenance grants. Of course, on the latter, we should always be looking to go that bit further. Reform Members just do not care about young people. They want to cut their wages—

[Richard Tice (Boston and Skegness) (Reform)]

Rubbish!

[Mr Charters]

Well, they want to cut the national minimum wage for young people. What a scandal! The Greens are peddling false hope to students and have no realistic plan to help with the cost of living. Their Members are not even here today. And this entire mess is totally of the Tory-led coalition Government’s making—the one I went to university under, by the way. We must help students with the cost of living so that they can live up to their full potential, rather than having a terrible experience at uni because they are struggling to make ends meet. So let us make a simple fix to the timings of maintenance loans to support millions of students up and down the country.

Question put and agreed to.

Ordered,

That Mr Luke Charters, Adam Jogee, Abtisam Mohamed, Tom Hayes, Pam Cox, Luke Myer, Mike Reader, Sarah Russell, Gareth Snell, Afzal Khan, Sam Carling and Dr Jeevun Sandher present the Bill.

Mr Luke Charters accordingly presented the Bill.

Bill read the First time; to be read a Second time on Friday 16 January, and to be printed (Bill 357).