Student Loan Repayment Plans

Helen Maguire Excerpts

Wednesday 25th February 2026 Westminster Hall

[Josh MacAlister]

I can confirm, as the Secretary of State for Education said earlier this week, this is an issue that we will, of course, look at. The plan 2 system was introduced in 2012 by the Conservatives and the Liberal Democrats in coalition. At the time, my party raised concerns about the design of that student loan package. When it was introduced, the threshold for repayment was only £21,000. Having said they would increase the threshold, the Conservatives and Liberal Democrats then froze it. They froze it in 2012, its first year; they froze it in 2013, in 2014 and in 2015: four years of Liberal Democrat and Conservative freezes to thresholds. The Conservatives then froze it in 2016. They froze it in 2017 and then again in 2021, 2022, 2023 and 2024. In total, there was a decade’s worth of freezes by parties who designed the model that they now stand here criticising. There is one phrase for that: crocodile tears.

[Helen Maguire (Epsom and Ewell) (LD)]

The Minister talks about the history of the student loan, and it is helpful for us all to understand that, but at the moment the students on plan 2 face a freeze—the very thing, along with previous Governments, that the Minister is criticising. It seems bizarre that he is criticising something on the one hand when he has taken action to do the same thing himself.

[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.