A cross-party committee of UK MPs has launched an inquiry into the fairness of the student loan system following widespread dissatisfaction with loan terms, particularly after Chancellor Rachel Reeves announced a freeze on repayment thresholds starting next year. The Treasury Committee is seeking evidence until April 14 on issues including loan interest rates, repayment conditions, and government powers to alter loan terms after introduction.
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The investigation focuses largely on Plan 2 loans, affecting graduates from 2012 to 2023, which carry high interest rates. According to the Institute for Fiscal Studies, graduates typically start with debts exceeding £50,000. Repayments begin once earnings exceed £28,470, at a rate of 9% of income above the threshold, with interest charged at the Retail Price Index plus up to 3%, causing many borrowers’ debts to grow despite payments.
Labour MP Dame Meg Hillier, chair of the Treasury Committee, emphasized the inquiry’s aim to examine whether recent policy changes have shifted loan conditions unfairly against graduates. The Labour Party plans to raise the repayment threshold next month before freezing it for three years, a move that has drawn concern from some MPs and graduates who advocate reversal of the freeze.
The government has made minor adjustments, including reintroducing means-tested maintenance grants from 2028/2029, and Chancellor Reeves has acknowledged the need for reform while stressing that any change must be fully funded. Reeves described the system as “inherited” and indicated that immediate comprehensive reforms are unlikely, citing budget priorities in health and defense.
Advocates such as consumer expert Martin Lewis support lowering interest rates and raising repayment thresholds to alleviate pressure on low- and middle-income graduates. The National Union of Students called the inquiry a response to sustained pressure from students and graduates and expressed readiness to collaborate on reform.
The Treasury Committee’s open call for evidence will inform recommendations on whether changes are required to make the student loan framework fairer for future and current borrowers.
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