Student Loan Repayment Plans

Ben Lake Excerpts

Wednesday 25th February 2026 Westminster Hall

[Jas Athwal]

The hon. Lady makes a valid point. I wholeheartedly agree that the system is rigged against working women who take time out to have children, so we need to make it fairer.

A graduate constituent of mine told me that she was the first woman in her entire lineage to go to university and get a degree, but she feels that that proud moment in her family’s history has been taken away from her by the regret that she has accrued a huge debt. The issue is not an isolated to Ilford South. As we hear from hon. Members across the Chamber, all across the country a whole generation feels bled dry by a system that keeps taking from them.

Another constituent told me that he left university with £64,000 of debt. Four years of repayment later, he now owes more than £99,000. This is not shared sacrifice, but a structural imbalance. We often speak of aspiration, but aspiration cannot thrive under compound interest designed in Whitehall. The repayment threshold sits only a few thousand pounds above the full-time minimum wage. Repayments begin early, just as graduates are finding their feet. People face income tax, national insurance, pension contributions, council tax and rent or, for those who are fortunate enough, a mortgage—and then we add 9%. For many, this does not feel like a loan; it functions as a long-term graduate tax, but without the honesty of calling it one.

From April 2027, the repayment threshold is scheduled to be frozen for three years. Freezing thresholds during wage growth means that more income falls into repayment. It increases lifetime contributions and tightens the squeeze on those who are already stretched. Yes, it improves Treasury forecasts, but is that really the motivation? Fairness is not measured only by spreadsheets. Outstanding student loan balances are projected to reach £500 billion in today’s prices by the mid-2040s.

[Ben Lake (Ceredigion Preseli) (PC)]

I am grateful to the hon. Gentleman for making such a powerful speech. Does he share my concern that one of the other consequences of these changes might be that fewer young people decide to go to university? That would obviously be to their detriment, but it would also be to the detriment of society in more general terms.

[Jas Athwal]

I agree, and I will make that point shortly. This is not only a graduate issue, but a fiscal time bomb. In 2024-25, write-offs recorded in Department for Education accounts rose to £310 million, up from £121 million the year before. The longer this system continues without reform, the more unstable it becomes for borrowers and Governments alike, and then where is the ambition? Every pound earned above the threshold attracts a 9% deduction, on top of existing taxes. The marginal deduction rate that many middle earners face is far higher than the headline rate suggests. Perception shapes behaviour. If progression feels like it is punished, and if promotion feels like a heavy deduction rather than a reward, morale suffers.

This generation did what we asked of them—they studied, trained and qualified—but many feel let down and misled. So what must change? Not the principle of contribution, because their education has to be paid for, but the fairness of the design. The Minister and the Government urgently need to reconsider the following, and I hope hon. Friends will add to this list: first, whether freezing thresholds is justified in a cost of living crisis; secondly, whether to raise the threshold to alleviate hardship and make the system fairer; thirdly, whether RPI remains an appropriate benchmark for interest calculations; and fourthly, whether a 9% repayment rate disproportionately affects middle earners and should be reduced.

Perhaps it should be a combination of all of the above, because tinkering at the edges will not suffice. Neither will knee-jerk reactions: some of the proposals I have heard, such as cutting the interest rate without addressing the structural flaws, offers only headlines, not solutions. Those who designed the system cannot now pretend they bear no responsibility for its consequences, when they had 12 years to get it right. Equally, suggesting we cut certain courses, as some have suggested, simply because the graduates on those courses repay less, confuses economic return with social value.