Student Loan Repayment Plans

Jack Rankin Excerpts

Wednesday 25th February 2026 Westminster Hall

[Jack Rankin (Windsor) (Con)]

It is a pleasure to serve under your chairmanship, Ms Lewell. I thank the hon. Member for Ilford South (Jas Athwal) for securing this important debate and highlighting one of the major challenges facing many young people in this country today: student loan repayments. Despite my youthful looks, I can clarify that I am on the last year of plan 1 loans, so this issue does not directly affect me. I have many contemporaries in that situation, though, and I think I understand it well.

When growing numbers of graduates are leaving university with mountains of debt and graduate recruitment is at a record low, there is an urgent need to address a system that is failing graduates. The hon. Member for Ilford South asked for broad agreement on that point. Although I did not agree with everything in his remarks, I think he has broad support across the House that the system as currently designed is not working. This issue affects a huge proportion of young people, given that over 50% of them now go to university. Combine that with a 30-year lifespan, and it becomes a generational problem.

Perhaps by coincidence, rather than design, this debate coincides with the announcement made by His Majesty’s most loyal Opposition of a new deal for young people. I acknowledge that it is partly responsive, but it has helped to bring the issue to the top of the news agenda. This debate could not be timelier. For young people, particularly those on plan 2 loans, there is not a moment to lose.

[Sarah Russell]

The hon. Gentleman has referred to plan 2 loans but plan 3 loans were also brought in by his Government. Plan 3 loans are for those with postgraduate qualifications—people who are definitely making an economic contribution to our society—and now kick in from when they earn £21,000. Does he agree that that was the wrong thing for his Government to do?

[Jack Rankin]

I do not want to talk about each plan individually, but this does need to be looked at in the round, as the hon. Lady is quite right to say.

Returning to the hon. Member for Ilford South, I am glad that he recognised—which some of his colleagues did not—that the beneficiaries of student loans should be asked to contribute. He called for fairness. I agree with him that, as it stands, the balance is not quite right. To my mind—the hon. Member for York Outer (Mr Charters) spoke to this—the main issue that we have seen is the breach of the promise on thresholds being frozen and on interest rates being increased. I acknowledge that we did that in government, but it has happened most recently in the recent Budgets. That is morally indefensible.

The hon. Members for Leeds East (Richard Burgon) and for York Central (Rachael Maskell), who I do not think are in their places anymore, made similar contributions from a left-wing point of view. I gently suggest that the mechanisms for mass debt cancellations, or even more, what they call “progressive taxation”, is not where we need to be. I am afraid I consider that to be the politics of the magic money tree. When we look at what is happening, one of the things that graduates are upset about is the unreasonable marginal rates of tax that they face as graduates when the student loan is included. More so-called “progressive” marginal rates of income tax would be part of the problem, not part of the solution.

I am aware that many a Conservative ex-Minister has stood at the shadow Dispatch Box and criticised the Government for things they themselves were doing in the recent past, so I say this with some self-awareness, but I say to the hon. Member for Eastbourne (Josh Babarinde) that the Liberal Democrats have to be careful on this issue—the faces on the Government Benches when the Liberal Democrats made some of their remarks were quite the picture.

The hon. Member for Dulwich and West Norwood (Helen Hayes), who I believe is the Chair of the Education Committee, made a fair point about the balance in education between economic outcomes and the broader social good of education. I agree with her that the case for education is broader than just economic, but I suggest that there is a balance. We have to be careful about whether it is progressive to send working-class children on university courses that will laden them with debt, but not provide them with the economic outcomes that they might need. There is a balance there to tread.

My hon. Friend the Member for Chester South and Eddisbury (Aphra Brandreth) talked about the nuance here, between the oppressive interest rates and the 30-year repayment threshold.

[Kevin Bonavia]

The hon. Member made the point about working-class people thinking about whether to go to university and be loaded with debt. Why should they have that worry when people who have far more family income do not have to make that choice?

[Jack Rankin]

I am not sure that I recognise that statement. At the risk of pointing out the obvious, I was not born in the parliamentary seat of Windsor. I grew up in Ashton-under-Lyne and was the kind of child the hon. Member probably has in mind. My passion at school was history but I did maths and physics at university. That was partly an economic choice that gave me opportunities that my parents and people I went to school with could not have dreamed of. That was a sensible decision I made for me and my family. Dismissing that as a relevant factor is not progressive.

[Natasha Irons]

Will the hon. Member give way?

[Jack Rankin]

I will, but I am aware of time.

[Natasha Irons]

On that point about making an economic choice, we are talking about the creative industries, which are worth hundreds of billions of pounds to our economy. Ensuring we have a diverse voice and qualified people in those jobs and having access to those skills is really important. I was a working-class child who ended up working at Channel 4 because of my degree. We should not ask working-class children to make those distinctions so early on in their careers; we should give them the opportunity to experience those careers as they move forward.

[Jack Rankin]

I agree, but would gently say that we want to ensure that people take the highest-quality creative courses imaginable, which we can honestly say will have economic benefits for them. That is the nuance and balance.

Because of the time, I will move on to my substantive remarks, though hon. Members having two minutes and 90 seconds to contribute does not do justice to the strength of feeling across the House. There is obviously broad unhappiness from those of all political colours and world views, and I wonder whether more time could be found to debate the matter on the Floor of the House.

The measures announced by the Chancellor in the autumn Budget are the most punitive yet for threshold and interest freezes. The freezing of repayment thresholds from April 2027 will cost the average graduate a further £300 a year by 2030, in an environment where rents are through the roof, job opportunities are few and the tax burden is at an all-time high. I gently say to the Minister that although we do have to balance the system so it is fiscally sustainable, this was done not to pay for education but to balance the books more broadly, which is unfair.

As I acknowledged earlier, it is unfair to change the rules post the fact for students who entered into the loan system in good faith when they were 18. Many graduates regard that as the behaviour of a loan shark rather than what they want to see from Government.

This week the Conservative party announced a new deal for young people, which rests on three pillars. The first is to reform the unfair student loans system. We would abolish real interest on plan 2 loans, ensuring that balances never rise faster than inflation. That responds to many of the criticisms in this debate.

The second pillar is more controversial. The fact is that university is not for everyone, nor should it be. One of the best ways to escape the debt pile is to avoid it. A university degree in today’s economy no longer guarantees work, sadly evidenced by the 700,000 graduates currently on benefits. That is why we would lift the funding cap for apprenticeships from 18 to 21-year-olds.

The third pillar is that we would make work pay through our new jobs bonus, where the first £5,000 of national insurance paid by any British citizen starting their first job would be placed in a personal savings account in their name. That money could go towards a deposit, starting a business or building a family.

Together with our plan to scrap stamp duty, that will help young people achieve home ownership and financial independence. Taken together, it represents the most ambitious policy package for young people in years and would re-enfranchise the lost generation. Fixing the voting system should be a priority for this Government. It is about fairness, repairing the intergenerational compact and ensuring that young people who play by the rules are rewarded for their aspiration and not taxed on it. I look forward to the Minister’s response.