Question to the Department for Education:

To ask His Majesty's Government whether student loan repayments made under the Plan 2 student loan scheme align with the levels originally expected when the plan was introduced; and what assessment they have made of the stability of the student loan scheme and the sustainability of this funding arrangement for higher education in the UK.

Answered by Baroness Smith of Malvern - Minister of State (Department for Work and Pensions)

We inherited the student loans system, including Plan 2, which was devised by the previous government. Threshold freezes have been introduced to protect taxpayers and students now, alongside future generations of learners and workers.

It is reasonable to ask those graduates who do benefit financially from higher education to contribute towards the cost of their studies. Graduates generally benefit from higher earnings, and ensuring they repay more of their loan is fair for those workers who have not gone to university or graduates on lower salaries.

There is precedent for multi-year threshold freezes. Plan 2 was held at £21,000 from its introduction until 2018 and was subsequently frozen for three years from financial years 2022/23 to 2024/25.

The student finance system is heavily subsidised by government, and lower-earning graduates will always be protected. Any outstanding loan, including interest, is cancelled at the end of the repayment term and debt is never passed on to family members or descendants. In financial year 2025/26 34% of loan debt for full-time Plan 2 graduates was forecast not to be repaid. We have to make the choices required to manage spend and the impact of these legacy loans.