Student Loan Repayment Plans Debate
Full Debate: Read Full DebateDepartment: Department for Education
Roz Savage
Main Page: Roz Savage (Liberal Democrat - South Cotswolds)Department Debates - View all Roz Savage's debates with the Department for Education
(1 day, 6 hours ago)
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Jas Athwal
I will later make the point about the structural imbalance that needs to be corrected. This situation is not just stressful for students; it should also concern the Treasury. Under plan 2 loans, graduates repay 9% of income above £28,470 this tax year. From April, that threshold rises to £29,385. Interest accrues from the moment the first payment is made to a university, long before students have graduated.
Dr Roz Savage (South Cotswolds) (LD)
Just a couple of weeks ago, I was contacted by a constituent who graduated in 2021 and has already accrued more than £6,000 of interest on her initial debt of £41,000. I was one of the lucky ones: as the first in my low-income family to go to university, I had tuition and maintenance paid. That was a great opportunity and leveller and, without it, I do not think I would be here now. Does the hon. Member agree that students and graduates have been at the mercy of arbitrary decision making for far too long, and that everyone deserves the right to pursue higher education, regardless of their class or generation?
Jas Athwal
I absolutely agree. This is so important, which is why we are here to look at the system.
Interest accrues from the moment the first payment is made, and it is linked to RPI, with the current maximum rate of 6.2%. Here is the stark reality: in 2024-25, plan 2 loans accrued £12.6 billion in interest, while borrowers repaid just £2.8 billion. In a single year, interest added to balances was more than four times the amount repaid. That is not a slogan but official data.
When graduates open their statements and see their balances rising, despite working hard and repaying every month, their anger is not ideological—it is rational. Students finishing university in 2024 entered repayment with an average debt of £53,000. That is the price tag now attached to aspiration. That burden falls unevenly, as those from wealthier families often avoid large maintenance borrowing and high earners quickly clear balances and reduce interest exposure. But the vast majority of middle earners—our nurses, teachers, engineers and small business employees—repay for decades, and most will never clear the balance.