Student Loans

Danny Beales Excerpts

Wednesday 18th March 2026 Commons Chamber

[Danny Beales (Uxbridge and South Ruislip) (Lab)]

I welcome the opportunity to discuss the student loans system. I took out a student loan under the plan 1 system. I am, fortunately, not young enough to have benefited from a plan 2, or, now, a plan 5 loan. However, despite having graduated with about £40,000 of student debt, I did consider myself fortunate—fortunate that I went to university under a Labour Government who had widened participation in higher education and created a fees, grants and loans system that enabled me to go to university and pay my living costs, which my single-parent family would not have been able to do without the grants that were, unfortunately, then cut by the Conservatives. I was happy to contribute towards my university education on the basis that most people at my school would not go to university, but a system that was one of contribution and fairness has become an aggressive system, and I believe it is time to review the plan 2, and now plan 5, loans systems.

I have heard from many of my constituents about the system as it is operating, including those at Brunel University. Recently, a teacher told me about the challenges of repaying her loan and how she is considering going part-time as a result of high interest rates. There are clearly a number of options that could be taken, such as changing the RPI basis to a CPI basis, capping lifetime interest costs and uprating the thresholds once again. Suggestions have also been made by the Good Growth Foundation.

It is important that, rather than going for any one of those changes, we properly analyse the options and the distributional impacts—work which the Conservative party clearly did not do given the half-baked proposals before us. It is quite baffling that the Conservatives moved this motion. Having been the architects of this regressive student loans system, having maintained the system for a decade, having continually frozen the repayment thresholds, and having trebled the fees when in coalition with the Lib Dems and cut maintenance grants for the poorest, they now pretend to be the party of students.

However, the mask has slipped in the last section of the Conservatives’ motion. They plan to pay for their minor change by reducing the number of people going to university. When they say that fewer young people should go to uni, they almost never mean that they should not, or that their children should not, and they do not mean that the universities in their constituencies should close. They are talking about other people, including those at universities such as Brunel in my constituency. They look down on the arts or “ology” courses that they feel have less benefit, and to be frank, that is elitism.

[Alex McIntyre]

My hon. Friend is making an excellent point about how, when the Opposition say they are going to cut funding for certain courses, they really mean that those courses will be available for wealthier students who can afford to pay for them without a Government subsidy. Does he agree that that will lead to a decrease in students from working-class backgrounds being able to access arts degrees?

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[Danny Beales]

I completely agree that everyone who would and could benefit from a university education should be able to go. We do not widen opportunities by cutting them.

John Burn-Murdoch’s analysis in the Financial Times has shown that other developed countries have increased participation in higher education and not seen the impact on graduate wages that we have seen. That is not inevitable as part of wider higher education participation. We have seen it because of the stagnation in the economy and of productivity caused by the last Conservative Government, not because of higher education participation.

There is a range of cost of living pressures on younger people. Yes, there are student loan costs, but there are also rising housing costs, the stagnation of wages more generally, childcare costs and renting costs, many of which need urgent action. I hear from young people in my constituency about the impact of starting a family or getting on the housing ladder. There was a generational compact that if people worked hard and got on, they would do better than their parents’ generation, but things we had come to take for granted were broken under the 14 years of Conservative Government.

Action was needed, and I am pleased that this Government are reforming and scrapping the broken leasehold system, capping ground rents and taking action on service charges. They have introduced the Renters Rights Act, which the Conservative party opposed. They are taking action on childcare with the 30 hours free childcare, and bringing down inflation and interest rates. I welcome the fact that the Chancellor and the Minister with responsibility for higher education have acknowledged that action is needed on student loans and are actively reviewing the student loans system. I hope that the Treasury Committee’s full inquiry, which is under way, will be fully and promptly responded to by the Government.

Let us be clear: the proposals before us would not solve the student loans system. They are a gimmick that would close participation and close doors of opportunity, which is exactly the opposite of what people and young people in this country need.

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[Neil O’Brien]

If the hon. Gentleman reads to the end of the IFS report, he will see that it costs our proposal in single-digit billions, and we have explained exactly how we will pay for it—I will come to that in a moment—so there is no gaping hole whatsoever. No wonder so many despair, with more broken promises from the Government and ever-rising debt, and no promise of action at any particular time.

How we would pay for our proposal—this goes to the hon. Gentleman’s question—is equally important. Since the last Government created the longitudinal education outcomes dataset, we have had much better data on which degrees do—or do not—provide economic value for students and taxpayers. Economic value is not the only value put on higher education, or any kind of education, but rather than simply pushing more young people towards courses that the Government’s own data show us do not benefit them—they do not help them, and they leave them feeling like they have been mis-sold and betrayed, with a lot of debt and nothing much to show for it—we need to have a rethink. The current approach is not working.

Since the election, youth unemployment has risen to levels significantly above the eurozone’s for the first time in a generation. That is mainly as a result of the Government’s decision to target lower-paid people for tax increases and to increase regulation, but it is not helped by the Government’s unbalanced approach to skills, based on an endless expansion of university courses whether they are any good or not.

[Danny Beales]

Will the hon. Member give way?

[Neil O’Brien]

Just one moment.

Analysis by the IFS found that total returns on going to university will be negative for about 30% of both men and women—and that is based on the cohort from the noughties. The problem now is probably even bigger because the graduate premium has declined further. As a result, many graduates now earn so little that they will never fully repay their student loans, leaving the taxpayer to cover about £8 billion in losses every year. That is why we would restore the number controls that existed for 70 years and use that to reduce the number of people who are on courses that are not good value for the taxpayer and not helping the young people, either.

To listen to Labour Members, anyone would think that there was not a single bad course, that every single course is totally brilliant and that there is no prospect of ever reducing spending on any single course. That is a fantasy world. We do not say about any other type of public service that every single instance of it is completely brilliant and there is no scope for improvement. We would use the savings from our proposal not just to abolish real interest rates on plan 2 loans but to double the number of apprenticeships for 18 to 21-year-olds so that quality apprenticeships are a real choice at age 18.

Why would we do that? Recent data shows that five years after finishing a course in 2018, the average level 4 apprentice was earning £32,000; by contrast, the average graduate was earning just £26,500 and the lower quartile of graduates were earning £19,000 or less. In many cases, a high-quality apprenticeship can be a better option than a low-value university course. That is why we would make that change.