Student Loan Repayment Plans

Jess Brown-Fuller Excerpts

Wednesday 25th February 2026 Westminster Hall

[Jas Athwal]

I absolutely agree. This is so important, which is why we are here to look at the system.

Interest accrues from the moment the first payment is made, and it is linked to RPI, with the current maximum rate of 6.2%. Here is the stark reality: in 2024-25, plan 2 loans accrued £12.6 billion in interest, while borrowers repaid just £2.8 billion. In a single year, interest added to balances was more than four times the amount repaid. That is not a slogan but official data.

When graduates open their statements and see their balances rising, despite working hard and repaying every month, their anger is not ideological—it is rational. Students finishing university in 2024 entered repayment with an average debt of £53,000. That is the price tag now attached to aspiration. That burden falls unevenly, as those from wealthier families often avoid large maintenance borrowing and high earners quickly clear balances and reduce interest exposure. But the vast majority of middle earners—our nurses, teachers, engineers and small business employees—repay for decades, and most will never clear the balance.

[Jess Brown-Fuller (Chichester) (LD)]

Does the hon. Gentleman agree that this issue disproportionately affects women and those who have caring responsibilities? I have a constituent who was successfully paying down her student loan. She took a few years off to have children, and when she came back to the employed world, her bill was bigger than when she left university, so the starting point was higher. She knows that she will be paying it off until she retires. Does the hon. Gentleman agree that that is an unacceptable situation to be in?

[Jas Athwal]

The hon. Lady makes a valid point. I wholeheartedly agree that the system is rigged against working women who take time out to have children, so we need to make it fairer.

A graduate constituent of mine told me that she was the first woman in her entire lineage to go to university and get a degree, but she feels that that proud moment in her family’s history has been taken away from her by the regret that she has accrued a huge debt. The issue is not an isolated to Ilford South. As we hear from hon. Members across the Chamber, all across the country a whole generation feels bled dry by a system that keeps taking from them.

Another constituent told me that he left university with £64,000 of debt. Four years of repayment later, he now owes more than £99,000. This is not shared sacrifice, but a structural imbalance. We often speak of aspiration, but aspiration cannot thrive under compound interest designed in Whitehall. The repayment threshold sits only a few thousand pounds above the full-time minimum wage. Repayments begin early, just as graduates are finding their feet. People face income tax, national insurance, pension contributions, council tax and rent or, for those who are fortunate enough, a mortgage—and then we add 9%. For many, this does not feel like a loan; it functions as a long-term graduate tax, but without the honesty of calling it one.

From April 2027, the repayment threshold is scheduled to be frozen for three years. Freezing thresholds during wage growth means that more income falls into repayment. It increases lifetime contributions and tightens the squeeze on those who are already stretched. Yes, it improves Treasury forecasts, but is that really the motivation? Fairness is not measured only by spreadsheets. Outstanding student loan balances are projected to reach £500 billion in today’s prices by the mid-2040s.