Student Loans: Review

Lord Young of Cookham Excerpts

Tuesday 24th February 2026 Lords Chamber

Asked by

[Lord Young of Cookham]

To ask His Majesty’s Government what plans they have to review the student loans regime.

[The Minister of State, Department for Education and Department for Work and Pensions (Baroness Smith of Malvern) (Lab)]

My Lords, given the inherited fiscal situation, we are making tough but necessary decisions to protect both taxpayers and students. It is right that those who can afford to repay their student loans do so. The system remains heavily subsidised. Lower-earning graduates are always protected by the cancellation of any outstanding loan and interest at the end of their repayment term. The Government continuously review student finance to ensure that it remains fair, sustainable and supportive of students from all backgrounds.

[Lord Young of Cookham (Con)]

I am grateful for that. At the moment, a student leaving with an average debt of £53,000 has to earn £66,000 per year just to cover the interest on the debt. The deputy leader of the Labour Party recently described that as “egregious”. The Budget made the situation even worse by freezing the thresholds for students from 2027. A month ago, the Chancellor described the current regime as “fair and reasonable”, but not a lot of people agreed. Does the noble Baroness think the leader of the Opposition might be on the right track by suggesting capping loans at RPI?

[Baroness Smith of Malvern (Lab)]

I know the noble Lord would not want the suggestion to be made that the level of debt impacts on the amount anybody repays in any given month, because, of course, that is wrong. As I have already identified, the majority of students do not repay the whole of their loan, so they already receive a considerable subsidy from the state. I am sure there are noble Lords in this House who feel slightly aggrieved about being accused, as the leader of the Opposition did, of presiding over a scam in developing the current plan 2 student loan system, but it is important that we maintain the protection for students and graduates that the student loan system creates while being open to thinking about how we can mitigate its burdens on students and those who are repaying their student finance.