Question to the Department for Education:

To ask the Secretary of State for Education, what assessment she has made of the potential impact of freezing the income repayment threshold for Plan 2 student loans on the level of disposable income of graduates earning between £29,000 and £40,000 per year.

Plan 2 student loans were designed and implemented by previous governments, and students in England starting degrees under this government have different arrangements. Threshold freezes have been introduced to protect taxpayers and students now, alongside future generations of learners and workers.

Student loan repayments are linked to income, not to the amount borrowed or interest applied. As repayments remain income-contingent if a borrower’s salary remains the same, their monthly repayments will also stay the same.

Repayments are made at a constant rate of 9% above the earnings threshold. Borrowers earning under the earnings threshold, are not required to make repayments. Any outstanding loan including interest built up, is cancelled at the end of the loan term with no detriment to the borrower, and debt is never passed on to family members or descendants.

The government appreciates that making student loan repayments has an impact on individuals, and this is why there are unique protections for borrowers and the finance system is heavily subsidised by taxpayers.