Question to the Department for Education:

To ask the Secretary of State for Education, what estimate she has made of the difference between the repayment threshold that will apply in 2029-30 under current policy and the threshold that would apply had it been uprated in line with average earnings from 2016.

Answered by Josh MacAlister - Parliamentary Under-Secretary (Department for Education)

The forecasted repayment threshold for Plan 2 can be found within the data published in the Student Loan Forecasts for England publication here: https://explore-education-statistics.service.gov.uk/find-statistics/student-loan-forecasts-for-england/2025-26#content.

Under current policy, the Plan 2 repayment threshold is forecasted to be £29,385 in the 2029/30 financial year. This includes the impact of the Plan 2 threshold freeze from the 2027/28 financial year for three years.

The Plan 2 repayment threshold in the 2016/17 financial year was £21,000, which can be found here: https://www.gov.uk/guidance/previous-annual-repayment-thresholds. If the repayment threshold had been uprated in line with economy-wide average earnings from 2016, the Plan 2 repayment threshold would be £33,735 in the 2029/30 financial year. The forecasted average earnings used to uprate the threshold are from the 2026 Spring Statement Economic and Fiscal Outlook published by Office of Budget and Responsibility.

There would be a £4,350 difference if the Plan 2 repayment threshold had been uprated in line with average earnings from 2016. This difference reflects the difference in uprating mechanism, periods of threshold freezes and the one-off increase to the threshold in 2018.

Question to the Department for Education:

To ask the Secretary of State for Education, what estimate her Department has made of the number of graduates with Plan 2 loans who are considering leaving the UK in order to reduce their total student loan repayments.

Answered by Josh MacAlister - Parliamentary Under-Secretary (Department for Education)

When a borrower moves overseas to live or work, the obligation to repay a student loan within the terms and conditions they signed up to still remains. Where a borrower who has moved overseas chooses either not to engage with the Student Loans Company (SLC) or make repayments where their income is above the relevant threshold for that country, arrears will build up on the student loan account. The borrower will also be in breach of the terms and conditions of their student loan, with the arrears flagged to the SLC debt recovery team.

The SLC continue to target non-compliant overseas borrowers using the application of fraud detection and investigatory techniques. Where this fails, SLC work with a debt collection agency to target borrowers with arrears balances. Further action, including legal action, can also be taken to secure recovery.

Question to the Department for Education:

To ask the Secretary of State for Education, what comparative assessment she has made of the UK's 9% student loan repayment rate against the income-contingent repayment rates applied in comparable systems, including Australia and New Zealand.

Answered by Josh MacAlister - Parliamentary Under-Secretary (Department for Education)

Each country has the opportunity to develop its own system of student loans, balancing the costs of that system in the way that best suit their priorities.

Overall, we consider that our student finance system should protect low and middle-earners, and balances the interests of graduates against those of taxpayers who help fund the system, including many lower earners who have never had the chance to attend university.

Question to the Department for Education:

To ask the Secretary of State for Education, what assessment she has made of the potential impact of above-inflation student loan interest rates on the incentive for high-earning graduates, including doctors, to remain resident in the UK for tax purposes.

Answered by Josh MacAlister - Parliamentary Under-Secretary (Department for Education)

Plan 2 was designed and implemented by the previous government. Interest is applied at Retail Price Index (RPI) for borrowers whose earnings are below the repayment threshold, including those on statutory maternity leave. This means that the value of their outstanding loan will not increase in real terms.

Under this government, borrowers receiving Plan 5 student loans, accrue interest at RPI only, currently 4.1%, so graduates, including high-earners, will not repay more than they borrowed in real terms. Under all repayment plans, borrowers whose earnings fall below the repayment threshold are not required to make repayments.

Graduates only begin repaying once their earnings exceed the repayment threshold, paying 9% of income above that level. If earnings fall, such as when on statutory maternity leave, so do a borrowers repayments. Therefore, whilst interest accrues on loan balances until the loan has been repaid in full or cancelled, interest rates do not impact monthly repayments made by borrowers.

For all borrowers, any outstanding loan, including interest accrued, will be cancelled after the loan term ends, and debt is never passed on to family members or descendants. There are no commercial loans that offer this level of protection to borrowers.

Question to the Department for Education:

To ask the Secretary of State for Education, what assessment she has made of the potential impact of interest accruing during maternity leave and periods of part-time work on the loan balances of women graduates with Plan 2 loans.

Answered by Josh MacAlister - Parliamentary Under-Secretary (Department for Education)

Plan 2 was designed and implemented by the previous government. Interest is applied at Retail Price Index (RPI) for borrowers whose earnings are below the repayment threshold, including those on statutory maternity leave. This means that the value of their outstanding loan will not increase in real terms.

Under this government, borrowers receiving Plan 5 student loans, accrue interest at RPI only, currently 4.1%, so graduates, including high-earners, will not repay more than they borrowed in real terms. Under all repayment plans, borrowers whose earnings fall below the repayment threshold are not required to make repayments.

Graduates only begin repaying once their earnings exceed the repayment threshold, paying 9% of income above that level. If earnings fall, such as when on statutory maternity leave, so do a borrowers repayments. Therefore, whilst interest accrues on loan balances until the loan has been repaid in full or cancelled, interest rates do not impact monthly repayments made by borrowers.

For all borrowers, any outstanding loan, including interest accrued, will be cancelled after the loan term ends, and debt is never passed on to family members or descendants. There are no commercial loans that offer this level of protection to borrowers.

Question to the Department for Education:

To ask the Secretary of State for Education, what assessment she has made of the potential impact on public finances of capping interest on Plan 2 student loans at the rate of Consumer Price Index inflation, rather than the Retail Prices Index.

Answered by Josh MacAlister - Parliamentary Under-Secretary (Department for Education)

The department recognises that the student finance system is not working as fairly or effectively as it should and we continue to look at financially sustainable ways to make the system fairer for students, graduates and taxpayers.

We have already taken action by capping the maximum interest rates on plan 2 and plan 3 loans at 6% for the 2026/27 academic year. This protects borrowers from the risk of inflation shocks.

The Office for National Statistics has confirmed that it will bring the methods and data sources used to calculate owner occupiers’ housing costs into the retail prices index from February 2030. The government will continue to consider the appropriate treatment of inflation measures within the student finance system as part of its ongoing consideration of higher education funding and student support arrangements.

Question to the Department for Education:

To ask the Secretary of State for Education, what assessment she has made of the Office for National Statistics' conclusion that the Retail Prices Index is not a reliable measure of inflation for the purposes of setting student loan interest rates.

Answered by Josh MacAlister - Parliamentary Under-Secretary (Department for Education)

The department recognises that the student finance system is not working as fairly or effectively as it should and we continue to look at financially sustainable ways to make the system fairer for students, graduates and taxpayers.

We have already taken action by capping the maximum interest rates on plan 2 and plan 3 loans at 6% for the 2026/27 academic year. This protects borrowers from the risk of inflation shocks.

The Office for National Statistics has confirmed that it will bring the methods and data sources used to calculate owner occupiers’ housing costs into the retail prices index from February 2030. The government will continue to consider the appropriate treatment of inflation measures within the student finance system as part of its ongoing consideration of higher education funding and student support arrangements.

Question to the Department for Education:

To ask the Secretary of State for Education, what plans she has to replace the Retail Prices Index with the Consumer Prices Index as the basis for calculating interest on Plan 2 student loans.

Answered by Josh MacAlister - Parliamentary Under-Secretary (Department for Education)

The department recognises that the student finance system is not working as fairly or effectively as it should and we continue to look at financially sustainable ways to make the system fairer for students, graduates and taxpayers.

We have already taken action by capping the maximum interest rates on plan 2 and plan 3 loans at 6% for the 2026/27 academic year. This protects borrowers from the risk of inflation shocks.

The Office for National Statistics has confirmed that it will bring the methods and data sources used to calculate owner occupiers’ housing costs into the retail prices index from February 2030. The government will continue to consider the appropriate treatment of inflation measures within the student finance system as part of its ongoing consideration of higher education funding and student support arrangements.

Question to the Department for Environment, Food and Rural Affairs:

To ask the Secretary of State for Environment, Food and Rural Affairs, what assessment her Department has made of the potential impact of the (a) closure and (b) lack of capacity of producer compliance schemes for fridges and freezers on local authorities, including the need for them to meet the cost of such disposals.

Answered by Emma Hardy - Minister of State (Department for Environment, Food and Rural Affairs)

Defra is working with stakeholders to monitor the situation and support industry to develop solutions.

The Environment Agency has published a Regulatory Position Statement (RPS) to allow temporary storage. Producer Compliance Schemes should work with councils and treatment facilities to identify appropriate sites and come to arrangements over the costs.

Question to the Department for Environment, Food and Rural Affairs:

To ask the Secretary of State for Environment, Food and Rural Affairs, what assessment her Department has made of the potential merits of requiring produce compliance schemes for fridges and freezers that lack sufficient processing capacity to identify and utilise suitable storage sites.

Answered by Emma Hardy - Minister of State (Department for Environment, Food and Rural Affairs)

Defra is working with stakeholders to monitor the situation and support industry to develop solutions.

The Environment Agency has published a Regulatory Position Statement (RPS) to allow temporary storage. Producer Compliance Schemes should work with councils and treatment facilities to identify appropriate sites and come to arrangements over the costs.

Question to the Department for Environment, Food and Rural Affairs:

To ask the Secretary of State for Environment, Food and Rural Affairs, what steps her Department has taken to help ensure producer compliance schemes for fridges and freezers are able to operate effectively, given the reduction in the number of processing facilities.

Answered by Emma Hardy - Minister of State (Department for Environment, Food and Rural Affairs)

Defra is working with stakeholders to monitor the situation and support industry to develop solutions.

The Environment Agency has published a Regulatory Position Statement (RPS) to allow temporary storage. Producer Compliance Schemes should work with councils and treatment facilities to identify appropriate sites and come to arrangements over the costs.

Question to the Department for Education:

To ask the Secretary of State for Education, what assessment she has made of the potential implications for her policies of the Institute for Fiscal Studies' estimate that raising the Plan 2 repayment threshold to £31,200 and indexing it to earnings would cost the Exchequer in the region of £3 billion for the 2022-23 cohort.

Answered by Josh MacAlister - Parliamentary Under-Secretary (Department for Education)

The Institute for Fiscal Studies utilise a different model to calculate their estimates on student loan costs. This model is known to be substantially more optimistic about graduates' mid-career earnings than the department’s model.

It is important that we maintain a sustainable student finance system that is fair to taxpayers while continuing to support access to higher education for students from all backgrounds. To this end, the government keeps all aspects of the student finance system, including student loan repayment thresholds, under review.

Over time, this has led to reforms being made to student loan terms. Such reforms take into account factors such as macroeconomic conditions, demographic trends and the participation rate in higher education at the time.

Question to the Department for Education:

To ask the Secretary of State for Education, whether she has considered the potential fiscal and distributional effects of permanent earnings-linked indexation of student loan repayment thresholds, to avoid future retrospective freezes.

Answered by Josh MacAlister - Parliamentary Under-Secretary (Department for Education)

The Institute for Fiscal Studies utilise a different model to calculate their estimates on student loan costs. This model is known to be substantially more optimistic about graduates' mid-career earnings than the department’s model.

It is important that we maintain a sustainable student finance system that is fair to taxpayers while continuing to support access to higher education for students from all backgrounds. To this end, the government keeps all aspects of the student finance system, including student loan repayment thresholds, under review.

Over time, this has led to reforms being made to student loan terms. Such reforms take into account factors such as macroeconomic conditions, demographic trends and the participation rate in higher education at the time.

Question to the Department for Education:

To ask the Secretary of State for Education, what assessment she has made of the proportion of PAYE earners currently subject to a combined marginal deduction rate, including student loan repayments, of 50% or more.

Answered by Josh MacAlister - Parliamentary Under-Secretary (Department for Education)

The rate of repayment for undergraduate student loans is 9% on all income above the relevant threshold, and 6% on all income above the relevant threshold for postgraduate loans. Other factors, including any reliefs, pension contributions, or receipt of certain means-tested welfare benefits could adjust an individual’s effective tax rate. The department does not hold the data required to calculate combined marginal tax rates for individuals.

Question to the Department for Education:

To ask the Secretary of State for Education, what assessment she has made of the potential impact of the repayment threshold freeze on the take-home pay of graduates employed in the public sector, including teachers and NHS staff.

Answered by Josh MacAlister - Parliamentary Under-Secretary (Department for Education)

The student loans system inherited by the department, including Plan 2 loans, was devised by the previous government.

This government increased the Plan 2 repayment threshold in 2025 for the first time since 2021. It increased the threshold again to £29,385 on 6 April 2026 and will remain at this level until April 2030, after which it will increase annually in line with inflation. The threshold freeze was introduced to protect taxpayers and students now, alongside future generations of learners and workers.

The department produced the following analysis regarding the impact of freezing the repayment and interest thresholds:

The department will publish an equality impact assessment covering the Plan 2 repayment and interest threshold freezes announced at Autumn Budget 2025, including their effect on lifetime repayments and other borrower outcomes. Published results may differ from the figures above because of subsequent model and data updates.

Question to the Department for Education:

To ask the Secretary of State for Education, what estimate she has made of the additional lifetime amount an average Plan 2 borrower will repay as a result of the repayment threshold freeze announced at Autumn Budget 2025.

Answered by Josh MacAlister - Parliamentary Under-Secretary (Department for Education)

The student loans system inherited by the department, including Plan 2 loans, was devised by the previous government.

This government increased the Plan 2 repayment threshold in 2025 for the first time since 2021. It increased the threshold again to £29,385 on 6 April 2026 and will remain at this level until April 2030, after which it will increase annually in line with inflation. The threshold freeze was introduced to protect taxpayers and students now, alongside future generations of learners and workers.

The department produced the following analysis regarding the impact of freezing the repayment and interest thresholds:

The department will publish an equality impact assessment covering the Plan 2 repayment and interest threshold freezes announced at Autumn Budget 2025, including their effect on lifetime repayments and other borrower outcomes. Published results may differ from the figures above because of subsequent model and data updates.

Question to the Department for Education:

To ask the Secretary of State for Education, what proportion of borrowers who took out Plan 2 student loans between 2012 and 2022 her Department forecasts will repay more, in real terms, than the amount they originally borrowed.

Answered by Josh MacAlister - Parliamentary Under-Secretary (Department for Education)

The salary a Plan 2 borrower must earn for their repayments to exceed interest accrual in a given financial year is dependent on how much the borrower owes. A borrower with a balance of £52,100, the mean average of all Plan 2 borrowers, would need to earn £63,600 to have their balance decrease in cash terms in the 2026/27 financial year. Further earnings-based student loan forecasts can be found at: https://explore-education-statistics.service.gov.uk/find-statistics/student-loan-forecasts-earnings/2025-26.

The Resource Accounting and Budgeting (RAB) charge for Plan 2 full time outlay in 2026/27 financial year is 43%, and for Plan 2 part time outlay it is 37%. The RAB charge is the estimated cost to government of providing a subsidy for the student finance system, calculated as the proportion of outlay issued each year that is forecast not to be repaid when valuing future repayments in present terms using His Majesty’s Treasury’s discount rate.

Student loan forecasts for England for the 2025/26 financial year can be found at: https://explore-education-statistics.service.gov.uk/find-statistics/student-loan-forecasts-for-england/2025-26#dataBlock-45709243-5e56-47d5-9e4e-abf97fbd89d1-tables.

The department does not hold analysis on the proportion of borrowers across all cohorts forecasted to repay more in real terms than the amount they originally borrowed. The expected proportion of outlay repaid in real terms broken down by lifetime earnings decile for the final, cohort of Plan 2 borrowers was published in table 2.1 of the 2023/23 web release ‘Student loan forecasts for England’, which can be found at: https://explore-education-statistics.service.gov.uk/find-statistics/student-loan-forecasts-for-england/2022-23#section-undergraduate-learners-with-higher-education-student-loans-average-repayment-per-student.

Question to the Department for Education:

To ask the Secretary of State for Education, what assessment she has made of the potential impact of the Plan 2 repayment threshold freeze on graduates working as (a) teachers, (b) nurses and (c) other public sector professionals.

Answered by Josh MacAlister - Parliamentary Under-Secretary (Department for Education)

The student loans system inherited by the department, including Plan 2 loans, was devised by the previous government.

This government increased the Plan 2 repayment threshold in 2025 for the first time since 2021. It increased the threshold again to £29,385 on 6 April 2026 and will remain at this level until April 2030, after which it will increase annually in line with inflation. The threshold freeze was introduced to protect taxpayers and students now, alongside future generations of learners and workers.

The department produced the following analysis regarding the impact of freezing the repayment and interest thresholds:

The department will publish an equality impact assessment covering the Plan 2 repayment and interest threshold freezes announced at Autumn Budget 2025, including their effect on lifetime repayments and other borrower outcomes. Published results may differ from the figures above because of subsequent model and data updates.

Question to the Department for Education:

To ask the Secretary of State for Education, what representations she has received on the potential impact of the Plan 2 repayment threshold freeze on household disposable income and consumer spending.

Answered by Josh MacAlister - Parliamentary Under-Secretary (Department for Education)

The student loans system inherited by the department, including Plan 2 loans, was devised by the previous government.

This government increased the Plan 2 repayment threshold in 2025 for the first time since 2021. It increased the threshold again to £29,385 on 6 April 2026 and will remain at this level until April 2030, after which it will increase annually in line with inflation. The threshold freeze was introduced to protect taxpayers and students now, alongside future generations of learners and workers.

The department produced the following analysis regarding the impact of freezing the repayment and interest thresholds:

The department will publish an equality impact assessment covering the Plan 2 repayment and interest threshold freezes announced at Autumn Budget 2025, including their effect on lifetime repayments and other borrower outcomes. Published results may differ from the figures above because of subsequent model and data updates.

Question to the Department for Education:

To ask the Secretary of State for Education, what assessment she has made of the potential impact of freezing the Plan 2 student loan repayment threshold between April 2027 and April 2030 on graduates' disposable income.

Answered by Josh MacAlister - Parliamentary Under-Secretary (Department for Education)

The student loans system inherited by the department, including Plan 2 loans, was devised by the previous government.

This government increased the Plan 2 repayment threshold in 2025 for the first time since 2021. It increased the threshold again to £29,385 on 6 April 2026 and will remain at this level until April 2030, after which it will increase annually in line with inflation. The threshold freeze was introduced to protect taxpayers and students now, alongside future generations of learners and workers.

The department produced the following analysis regarding the impact of freezing the repayment and interest thresholds:

The department will publish an equality impact assessment covering the Plan 2 repayment and interest threshold freezes announced at Autumn Budget 2025, including their effect on lifetime repayments and other borrower outcomes. Published results may differ from the figures above because of subsequent model and data updates.

Question to the Department for Education:

To ask the Secretary of State for Education, what estimate her Department has made of the salary a Plan 2 borrower must earn for their outstanding loan balance to stop growing in cash terms, given current interest rates.

Answered by Josh MacAlister - Parliamentary Under-Secretary (Department for Education)

The salary a Plan 2 borrower must earn for their repayments to exceed interest accrual in a given financial year is dependent on how much the borrower owes. A borrower with a balance of £52,100, the mean average of all Plan 2 borrowers, would need to earn £63,600 to have their balance decrease in cash terms in the 2026/27 financial year. Further earnings-based student loan forecasts can be found at: https://explore-education-statistics.service.gov.uk/find-statistics/student-loan-forecasts-earnings/2025-26.

The Resource Accounting and Budgeting (RAB) charge for Plan 2 full time outlay in 2026/27 financial year is 43%, and for Plan 2 part time outlay it is 37%. The RAB charge is the estimated cost to government of providing a subsidy for the student finance system, calculated as the proportion of outlay issued each year that is forecast not to be repaid when valuing future repayments in present terms using His Majesty’s Treasury’s discount rate.

Student loan forecasts for England for the 2025/26 financial year can be found at: https://explore-education-statistics.service.gov.uk/find-statistics/student-loan-forecasts-for-england/2025-26#dataBlock-45709243-5e56-47d5-9e4e-abf97fbd89d1-tables.

The department does not hold analysis on the proportion of borrowers across all cohorts forecasted to repay more in real terms than the amount they originally borrowed. The expected proportion of outlay repaid in real terms broken down by lifetime earnings decile for the final, cohort of Plan 2 borrowers was published in table 2.1 of the 2023/23 web release ‘Student loan forecasts for England’, which can be found at: https://explore-education-statistics.service.gov.uk/find-statistics/student-loan-forecasts-for-england/2022-23#section-undergraduate-learners-with-higher-education-student-loans-average-repayment-per-student.

Question to the Department for Education:

To ask the Secretary of State for Education, what estimate she has made of the proportion of the value of new Plan 2 loans that will never be repaid.

Answered by Josh MacAlister - Parliamentary Under-Secretary (Department for Education)

The salary a Plan 2 borrower must earn for their repayments to exceed interest accrual in a given financial year is dependent on how much the borrower owes. A borrower with a balance of £52,100, the mean average of all Plan 2 borrowers, would need to earn £63,600 to have their balance decrease in cash terms in the 2026/27 financial year. Further earnings-based student loan forecasts can be found at: https://explore-education-statistics.service.gov.uk/find-statistics/student-loan-forecasts-earnings/2025-26.

The Resource Accounting and Budgeting (RAB) charge for Plan 2 full time outlay in 2026/27 financial year is 43%, and for Plan 2 part time outlay it is 37%. The RAB charge is the estimated cost to government of providing a subsidy for the student finance system, calculated as the proportion of outlay issued each year that is forecast not to be repaid when valuing future repayments in present terms using His Majesty’s Treasury’s discount rate.

Student loan forecasts for England for the 2025/26 financial year can be found at: https://explore-education-statistics.service.gov.uk/find-statistics/student-loan-forecasts-for-england/2025-26#dataBlock-45709243-5e56-47d5-9e4e-abf97fbd89d1-tables.

The department does not hold analysis on the proportion of borrowers across all cohorts forecasted to repay more in real terms than the amount they originally borrowed. The expected proportion of outlay repaid in real terms broken down by lifetime earnings decile for the final, cohort of Plan 2 borrowers was published in table 2.1 of the 2023/23 web release ‘Student loan forecasts for England’, which can be found at: https://explore-education-statistics.service.gov.uk/find-statistics/student-loan-forecasts-for-england/2022-23#section-undergraduate-learners-with-higher-education-student-loans-average-repayment-per-student.

Question to the Department for Education:

To ask the Secretary of State for Education, what estimate she has made of the total value of interest charged above the rate of inflation on Plan 2 student loans since interest was first linked to the Retail Prices Index in March 2012.

Answered by Josh MacAlister - Parliamentary Under-Secretary (Department for Education)

The department does not hold an analysis of the total value of interest charged above the rate of inflation on Plan 2 student loans since interest was first linked to the Retail Prices Index in March 2012.

Question to the Department for Education:

To ask the Secretary of State for Education, what fiscal assessment her Department has made of a combined student loads package of a higher repayment threshold, interest capped at CPI, and a lower repayment rate.

Answered by Josh MacAlister - Parliamentary Under-Secretary (Department for Education)

We recognise that the student finance system we inherited is not working as fairly or effectively as it should, and that some students and graduates feel its effects more acutely than others.

We have already taken action to protect graduates by capping maximum interest rates on Plan 2 and Plan 3 loans at 6% for the 2026/27 academic year, protecting borrowers from the risk of inflation shocks. We have also increased the Plan 2 repayment threshold twice, its first increases since 2021. It now stands at £29,385, and borrowers earning below this threshold are not required to make any repayments at all.

We are clear these interventions do not resolve all the issues with Plan 2 loans, which were designed by previous governments. We continue to consider ways to improve the system, but fiscal responsibility requires us to consider how any further changes would be funded.

Question to the Department for Education:

To ask the Secretary of State for Education, whether she has considered introducing a lifetime repayment cap on Plan 2 student loans, set at a multiple of the amount originally borrowed; and if she will make an estimate of the cost of doing so.

Answered by Josh MacAlister - Parliamentary Under-Secretary (Department for Education)

We recognise that the student finance system we inherited is not working as fairly or effectively as it should, and that some students and graduates feel its effects more acutely than others.

We have already taken action to protect graduates by capping maximum interest rates on Plan 2 and Plan 3 loans at 6% for the 2026/27 academic year, protecting borrowers from the risk of inflation shocks. We have also increased the Plan 2 repayment threshold twice, its first increases since 2021. It now stands at £29,385, and borrowers earning below this threshold are not required to make any repayments at all.

We are clear these interventions do not resolve all the issues with Plan 2 loans, which were designed by previous governments. We continue to consider ways to improve the system, but fiscal responsibility requires us to consider how any further changes would be funded.

Question to the Department for Education:

To ask the Secretary of State for Education, whether she plans to bring forward proposals to lower the Plan 2 repayment rate in response to the Treasury Select Committee's inquiry into the student loans system.

Answered by Josh MacAlister - Parliamentary Under-Secretary (Department for Education)

We recognise that the student finance system we inherited is not working as fairly or effectively as it should, and that some students and graduates feel its effects more acutely than others.

We have already taken action to protect graduates by capping maximum interest rates on Plan 2 and Plan 3 loans at 6% for the 2026/27 academic year, protecting borrowers from the risk of inflation shocks. We have also increased the Plan 2 repayment threshold twice, its first increases since 2021. It now stands at £29,385, and borrowers earning below this threshold are not required to make any repayments at all.

We are clear these interventions do not resolve all the issues with Plan 2 loans, which were designed by previous governments. We continue to consider ways to improve the system, but fiscal responsibility requires us to consider how any further changes would be funded.

Question to the Department for Education:

To ask the Secretary of State for Education, whether she has considered the potential merits of introducing a cap on total lifetime student loan repayments, such as the 1.2 times principal cap recommended by the 2019 Review of Post-18 Education and Funding.

Answered by Josh MacAlister - Parliamentary Under-Secretary (Department for Education)

We recognise that the student finance system we inherited is not working as fairly or effectively as it should, and that some students and graduates feel its effects more acutely than others.

We have already taken action to protect graduates by capping maximum interest rates on Plan 2 and Plan 3 loans at 6% for the 2026/27 academic year, protecting borrowers from the risk of inflation shocks. We have also increased the Plan 2 repayment threshold twice, its first increases since 2021. It now stands at £29,385, and borrowers earning below this threshold are not required to make any repayments at all.

We are clear these interventions do not resolve all the issues with Plan 2 loans, which were designed by previous governments. We continue to consider ways to improve the system, but fiscal responsibility requires us to consider how any further changes would be funded.

Question to the Department for Education:

To ask the Secretary of State for Education, whether her Department has considered the potential merits of indexing the Plan 2 repayment threshold to average earnings on a permanent basis, to help ensure that further retrospective freezes are not required.

Answered by Josh MacAlister - Parliamentary Under-Secretary (Department for Education)

We recognise that the student finance system we inherited is not working as fairly or effectively as it should, and that some students and graduates feel its effects more acutely than others.

We have already taken action to protect graduates by capping maximum interest rates on Plan 2 and Plan 3 loans at 6% for the 2026/27 academic year, protecting borrowers from the risk of inflation shocks. We have also increased the Plan 2 repayment threshold twice, its first increases since 2021. It now stands at £29,385, and borrowers earning below this threshold are not required to make any repayments at all.

We are clear these interventions do not resolve all the issues with Plan 2 loans, which were designed by previous governments. We continue to consider ways to improve the system, but fiscal responsibility requires us to consider how any further changes would be funded.

Question to the Department for Education:

To ask the Secretary of State for Education, what assessment she has made of the combined marginal deduction rate faced by a graduate with a Plan 2 loan earning above the higher rate threshold, once income tax, National Insurance and the 9% loan repayment are accounted for.

Answered by Josh MacAlister - Parliamentary Under-Secretary (Department for Education)

The rate of repayment for undergraduate student loans is 9% on all income above the relevant threshold and 6% on all income above the relevant threshold for postgraduate loans. Other factors, including any reliefs, pension contributions or receipt of certain means-tested welfare benefits could adjust an individual’s effective tax rate.