Student Loan System

Baroness Blake of Leeds Excerpts

Tuesday 10th March 2026 Lords Chamber

[Lord Sikka]

To ask His Majesty’s Government what plans they have for reforming the student loan system.

[Baroness in Waiting/Government Whip (Baroness Blake of Leeds) (Lab)]

My Lords, as the Prime Minister and the Secretary of State for Education have outlined in the other place, this is indeed a complex system. We are looking for ways to make it fairer, but to be fiscally responsible we must consider how any change would be funded. The Government aim to be supportive of students from all backgrounds, including, for example, students from low incomes. For this reason, we are introducing maintenance grants of up to £1,000 a year.

[Lord Sikka (Lab)]

My Lords, the unjust loan system forces many graduates to bear real rates of interest and make repayments while earning less than the median wage. Millions of people are prevented from buying a home or starting a family or business. The Government have many policy options. These include abolishing university tuition fees, as in Scotland, charging only nominal rates of interest, cutting the repayment rate and aligning the repayment threshold with the median wage. Which of these policies does the Minister find attractive?

[Baroness Blake of Leeds (Lab)]

I am tempted to say, “Who needs an Opposition?” I emphasise that this system is obviously getting a lot of attention at the moment. There is a lot of disquiet about what is happening to our young people. Of course, the Opposition have experience in this and, indeed, probably have a lot to contribute on just how difficult it is to move it forward. The whole premise running through this is how we can make the system fair and make sure that it is affordable for all young people, regardless of their family backgrounds and financial support, so they can access the best education opportunities in this country. I believe that is a prize worth fighting for. We need to look at this in detail and move forward as we can.

[Lord Naseby (Con)]

My Lords, I declare an interest as having two granddaughters currently with student loans. Could not His Majesty’s Government take a simple decision tomorrow to drop from RPI to CPI and look at the wider aspects thereafter?

[Baroness Blake of Leeds (Lab)]

Well, I think we can safely say that no decision in this area is simple and straightforward: there are knock-on consequences of every single aspect. The responsible thing is to look at all of the detail, make sure that young people and their needs are kept at the forefront of this, and move forward in a sustainable way that brings benefit to everyone.

[Baroness Watkins of Tavistock (CB)]

My Lords, it is absolutely clear that there is no intergenerational fairness in the way that student loans are being funded at the moment. There are many of us in this House, and many of our spouses, who went to university for absolutely nothing. We are now faced with young graduates who are completely capable of estimating that the big amounts that will need to be repaid for people who have not repaid their loans will be in 30 years, when they will be 60. It will not be the majority of us here who contribute to that. At what point will we consider some form of taxation, so that we all encourage proper support for people at university?

[Baroness Blake of Leeds (Lab)]

I think the noble Baroness has outlined her views very clearly. Obviously, I cannot answer the questions that she raises today. There is no doubt that there is a strong feeling that previous generations did well, but I point out to her the small numbers of people in our generation, particularly women, who actually got to university. Now, surely, we have made progress, and we have to make sure that we move it forward in a fair and equitable way.

[Lord Mohammed of Tinsley (LD)]

My Lords, I declare an interest: my son has recently graduated and my daughter is at university. Given the widespread concerns among graduates, particularly those on plan 2 loans, about both the freezing of repayments and interest thresholds, what assessment have the Government made about the long-term impact of these policy changes, graduates’ debt burdens and monthly repayments?

[Baroness Blake of Leeds (Lab)]

I feel as though I should declare an interest in having four kids who have all gone at different times and have been on different plans. It is incredibly complicated. To reassure the noble Lord, I can only say that this subject will be constantly looked at and we will be looking forward to the best solutions to make sure that our young people are encouraged to get the best education they can.

[Baroness Barran (Con)]

Apart from welcoming the noble Lord, Lord Sikka, to the Benches on the other side of the House, I wanted to offer the Minister one simple thing that the Government could do while they work through, as she rightly says, many of the very complicated issues in this area. Many students who have been to university are asking whether they will ever be able to repay their loan and whether it was worth it. If the Government released the longitudinal educational outcome—LEO—data in full, they would be able to see which university and which course would allow them to do that. Could the Minister say when that will happen? If she cannot say today, perhaps she could write to me.

[Baroness Blake of Leeds (Lab)]

I thank the noble Baroness and of course I will write to her, but I emphasise to the House that any remaining balance after 30 years is cancelled. No debt passes to family members or any descendants: that is something perhaps we have lost a bit of sight of today. I am happy to provide the information she requests, but it is imperative that universities step up to the plate and demonstrate the quality and outcomes of the education that they provide.

[Lord Woodley (Lab)]

My Lords, as we all know, there are no university tuition fees in Scotland and across most of Europe, while in England it is completely different. The average student loan repayment scheme at the moment in Scotland is £18,000 while in England it is £53,000, and it is not disloyal to ask my Government whether we think that balance is right. Does the Minister think we could do more to assist English students during this very difficult period?

[Baroness Blake of Leeds (Lab)]

Of course, it is always instructive to compare different systems and work out the detail of this. Tuition fees—I am deliberately looking at the Benches opposite—have always been controversial. Having stood for Parliament in a seat with a predominantly student population and not been successful, I have some personal insight into this. However, we are where we are. We have a lot to learn from the experience of the last 14 or 15 years. Let us look at it calmly and sensibly, but keep the needs of our young people at the forefront of our minds.

[Baroness Deech (CB)]

My Lords, is the Minister aware that over £5 billion of student debt is owed by European Union students who went back and did not repay? What steps will the Government take to prevent this debt growing if we rejoin Erasmus, which is, after all, one-way traffic?

[Baroness Blake of Leeds (Lab)]

I am sure those considerations are being taken into account as we move forward with this. I do not have an answer for the noble Baroness at this moment, but oversight of all the implications of change of policy is critical.

[Lord Addington (LD)]

My Lords, will the Government give us some idea of what plan they have for economic growth and what we actually want out of our university and student population? At the moment, we have a system—we all can remember the scars of its introduction —which seems to suggest, “You’ve got a lot of loan, you might not get a job, why on earth you going?” Then the universities are saying, “We haven’t got enough money and we might have to close”.

[Baroness Blake of Leeds (Lab)]

I believe this is a very sensitive area and we should not make assumptions about directions of employment from particular courses that students take. It is important to recognise that universities are being asked to look at the quality of the education they provide and destination studies from their students are critical. We are determined to link all this to our priorities and objectives for growth and for those areas where we need a talented workstream coming forward.