Student Loans

Ian Sollom Excerpts

Wednesday 18th March 2026 Commons Chamber

[Ian Sollom (St Neots and Mid Cambridgeshire) (LD)]

I am grateful to the Opposition for this debate. In the recent Westminster Hall debate on this topic, we heard powerful testimony about the reality that graduates face in making repayments every month and watching their balance grow, with their plans deferred and lives constrained. I am sure we will hear more of that today, and those stories deserve to be heard and to receive a clear response, not a political runaround.

Parts of the motion are not wrong. The plan 2 threshold should be unfrozen, and while we may disagree on the specific change proposed, the interest structure does need reform, as the Liberal Democrats have said clearly. The motion also calls for more apprenticeships for 18 to 21-year-olds, and we welcome such investment in principle. We would go further by doubling degree apprenticeships in priority sectors and introducing skills co-operatives specifically to help small businesses to pool resources to take on apprentices they could not otherwise afford.

However, the question is whether the motion as a whole represents a serious plan, and I am afraid that it does not. Specifically, it calls for

“controlling the number of places on university courses where the benefits are significantly outweighed by the cost to graduates and taxpayers.”

Let us be clear about what

“controlling the number of places”

means. It means cutting. The courses they have in mind are arts, humanities and creative subjects.

The argument rests on a definition that sounds objective but is not: which courses have benefits that are significantly outweighed by their costs? The proxy appears effectively to be graduate salaries. Graduate salaries are a poor measure of what society gains from a degree. Nursing, teaching, social work and creative arts all underperform on salary data while delivering enormous public value, so what logic are the Conservatives applying? Even on salary terms, cutting arts places would damage science, technology, engineering and maths, not protect it, as one Labour Member mentioned. Arts courses are relatively cheap to deliver and cross-subsidise expensive laboratory provision. The Institute for Fiscal Studies explicitly found that reducing arts funding may, perversely, reduce funding for STEM.

[Alex McIntyre (Gloucester) (Lab)]

The hon. Gentleman is making a very important point. The Conservatives talk about cutting public funding for courses such as creative arts, but that will not stop the wealthiest students from accessing those courses. Does he agree with me that all that will happen is that people from more deprived parts of our country will not be able to access them, and that there will be one rule for them and another rule for everyone else?

[Ian Sollom]

The history of access to university demonstrates that point well.

[Graham Stuart]

I am trying to follow the mental perambulations of the left. The argument seems to be that people from working-class backgrounds can go on courses that lead them to have negative outcomes—poor earnings—and that the very course they are on, which does them little good, with so much promised and so little delivered, actually has the opportunity to cross-subsidise other people doing other courses. Both the hon. Gentleman and the hon. Member for Gloucester (Alex McIntyre) seem to think that is a good thing. Can they not see that, in reality, it is not?

[Ian Sollom]

I thank the right hon. Gentleman for his intervention, because that is one part of the argument I am making. There is a very important point about that, which is that it could equally be an argument for making the loan system fairer in its repayment terms to reflect that.

There is a deeper problem, too. The graduate earnings premium has declined in Britain, but not because we have too many graduates; it is because we have too few skilled jobs. That is a demand-side failure and a Conservative legacy. Our peers in OECD countries have expanded graduate numbers while maintaining the graduate premium, because they built the industries and invested in the regions that generate high-skilled employment. Cutting student numbers accepts our economic underperformance as permanent. It is, as I have said before, a counsel of despair dressed up as policy.

Then there are the creative industries: over £100 billion a year to the British economy; one of our most successful global exports; built on a pipeline of arts graduates. The answer is not to stop training the people on whom the whole pipeline depends. Ultimately, the value of an education cannot be read entirely from a graduate’s salary. The capacity for critical thinking, empathy and cultural participation are public goods, hidden in plain sight, that show up nowhere in write-off rates. A party that asks only “What does it pay?” has already decided something important about what it values.

[Dr Ben Spencer]

On the broader point of principle about the value of certain subjects, I intervened on the Minister and she failed to answer, so I will ask the hon. Gentleman the same question. Does he think that there are some subjects offered by some universities for which the value is quite poor and that it is unfair for the taxpayer to subsidise them? Does he think that in principle it is possible that those subjects exist?

[Ian Sollom]

The point is to allow the market and the regulation of that market to decide. [Interruption.] I will make some progress.

[Madam Deputy Speaker (Caroline Nokes)]

Order. To be helpful, the hon. Member might reflect on the fact that the microphone is in front of him; it makes it much harder for Hansard and for the viewing public to pick up his words if he faces the back of the Chamber.

[Ian Sollom]

Thank you, Madam Deputy Speaker.

I will turn to the threshold and the interest rate—areas on which we do substantially agree with the Conservative motion’s diagnosis, if not its proposed remedy. In the system as it stands, the interest rate matters financially only for those who repay in full, which most graduates do not. That is by design to share the costs between the graduate and the state. It means that the largest benefit of the Conservatives’ proposal would flow to the highest earners—those who repay completely. As analysis from the Institute for Fiscal Studies has shown, it would be regressive in its distribution, which is why more thought is required on interest structure.

On the threshold, the picture is more straightforward. Before the election, the Education Secretary promised that graduates would pay less under Labour, as the shadow Minister said, and, in their first Budget, the Government left the threshold rising. Then, in their second Budget, the Government froze the threshold for three years from 2027.

Ministers have cited a £5.9 billion figure as the yield of this change, but we should be clear about what that figure is: it is the discounted present value of extra repayments across nearly 30 years, with the bulk sitting in the 2030s, 2040s and 2050s. The annual cash impact during this Parliament is relatively small, and the change barely moves the needle on the Chancellor’s own fiscal rules. Graduates will bear a real and immediate burden in their payslip for the remainder of their loan for a cash-flow improvement that is modest in this Parliament and does nothing at all for the Chancellor’s balanced Budget rule. Of all the choices in November’s Budget, why did they make this one?

I note that the Government’s amendment today welcomes a commitment to making the system fairer, and such commitments should be welcomed. However, graduates are waiting for action. Let me therefore set out what the Liberal Democrats would do. First, we would unfreeze the plan 2 threshold immediately and tie it to earnings, as was originally promised. Secondly, we would restore meaningful maintenance grants. Students from the poorest families can borrow £1,284 less today in real terms than in 2020-21. The £1,000 grant reaches about 10% of students, restricted to specific subjects. I think we can do better on maintenance policy: grants must be available regardless of subject, and the parental income thresholds that have been frozen since 2008 must be urgently uprated.

Thirdly, we would establish a royal commission on graduate finance, including plans 2, 3 and 5—plans 3 and 5 have terms that are, in several respects, even harsher. All those plans should be in scope. It should also have independent oversight of key parameters. That is not to delay, but to look seriously at fairer interest structures, total repayment caps and progressive repayment rates, and, critically, to build the cross-party settlement that is the only real protection against the next Government squeezing graduates again.

The system has been treated as a fiscal convenience rather than a social contract by the previous Government, and now by this one. Graduates deserve better.