Student Loan Repayment Plans
Debate between Sarah Russell and Josh MacAlister(2 weeks, 4 days ago)
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Josh MacAlister
That is a very timely intervention, because when we were elected we recognised the pressures and acted. In this Parliament, the Government are lifting the plan 2 repayment threshold to £29,385, ending a four-year freeze. We have acted to ensure that the threshold rises to above average graduate salaries, because that was the right thing to do, despite the fiscal pressures we faced. Due to the enormous pressures on budgets and the need for fairness across the education system, especially in further education, and to support the long-term sustainability of the student loan system, we announced at Budget 2025 that the Government will freeze plans for repayment thresholds at £29,385 for three years from April 2027. I note that, even with that freeze, a borrower earning £30,000 will repay around £4 a month and the average plan 2 borrower will repay about £8 more a month.
The freeze will generate £5.9 billion—money that this Government are investing back into young people. We are making improvements to the education system, and the threshold freeze contributes to that. The improvements are happening both in higher education and in the wider skills landscape. We will be investing £1.2 billion more in skills training per year by 2028-29, ensuring that we develop and nurture the skills that many young people who do not go to university need for the future. We are supporting colleges, apprenticeships and technical training, areas that have too long been neglected by other parties, with record funding. I see the benefits of much of that in my constituency, where many young people choose to pursue education through vocational and technical routes. We are setting up technical excellence colleges, ripping out the red tape from the apprenticeship system, and ensuring that more foundation apprenticeships get young people into trades and careers that give them a brighter future.
Politics is about choices. When a Government come in and all public services are in a mess, they have to work through their priorities. Just this week, we have announced generational changes to the special educational needs system. Just today, the Government are announcing major changes to ensure that people can see timely justice in the courts. We are also making changes to improve the student finance system. First, from January 2027, the lifelong learning entitlement will enable learners to use student loans more flexibly than ever before. Secondly, from the 2028-29 academic year, we will introduce targeted, means-tested grants, which, again, were scrapped by the previous Government. Thirdly, to support students from the most disadvantaged backgrounds, we are future-proofing our maintenance loan offer, with loans for living costs increasing in line with forecast inflation every academic year.
This Government recognise the strength of feeling on the student loan system, particularly plan 2, and we will always look at issues that are important to the public. We will continue to keep this system under review.
Sarah Russell
The Minister has spoken very well about plan 2, and we are grateful that he will be looking at it, but so far as I can tell, plan 3 thresholds have remained frozen for postgrads at £21,000 since their inception. That is deeply unjust. Will he commit to looking at plan 3 as well as plan 2?
Josh MacAlister
As the Secretary of State said earlier this week, we will look at these issues.
Across the board, we are acting as a Government to support people with the cost of living: investing in free childcare, freezing rail fares, cutting energy bills—there is welcome news on that today—and introducing measures on rights at work and protections for renters. We understand the pressures facing young professionals and young graduates. As the Secretary of State has made very clear, we will of course look at this system in the round and at how it can be improved. I thank hon. Members for their contributions to the debate.