Student Loans

Laura Trott Excerpts

Wednesday 18th March 2026 Commons Chamber

[Laura Trott (Sevenoaks) (Con)]

I beg to move,

That this House calls on the Government to set the interest rate on Plan 2 student loans at a level which ensures that balances will never rise faster than RPI inflation; further calls on the Government to stop the freeze on repayment thresholds; and also calls on the Government to create more apprenticeships for 18-21 year olds, funded by controlling the number of places on university courses where the benefits are significantly outweighed by the cost to graduates and taxpayers.

In June 2023, the then shadow Education Secretary, the right hon. Member for Houghton and Sunderland South (Bridget Phillipson), proclaimed, “Graduates, you will pay less under Labour”. Well, it turns out that that was not true; under Labour, graduates are paying more. So far, under this Government tuition fees have gone up twice. This is a long way from the abolition of tuition fees offered up by a fresh-faced candidate for the Labour leadership just a few years ago—I wonder what happened to him.

It is no wonder that students feel misled by this Government. Not content with hiking tuition fees when they said they would not, this Government also froze the thresholds for repayments, making loans even more expensive for graduates. As with everything this Chancellor touches, she makes it worse. Her choice to freeze the repayment thresholds has left young people paying more and sooner. What did the Chancellor say when challenged about the threshold freeze in January? She said that the student loan system is “fair and reasonable”. To be clear, this was the stance—that the student loan system and the threshold freeze were “fair and reasonable”—of the Labour Government as recently as January. Tell that to the graduate forced to pay an extra £24,000 because of the Chancellor’s changes. The Chancellor is wrong: it is not fair or reasonable.

[Mr Jonathan Brash (Hartlepool) (Lab)]

Given that plan 2 tuition fees were introduced by the Conservatives in 2012, that they froze the repayment thresholds in 2016 and that they abolished the maintenance grants, was that fair then?

[Laura Trott]

The hon. Gentleman is missing the fact that Labour has made it worse. Even now, the Chancellor has changed her tune—no surprise given the track record of this Government. She now says that the system is “broken”, but young people are apparently not at the “front of the queue”. I did not see that on the front of the Labour manifesto. We on the Opposition Benches think that young people should be at the front of the queue, because thanks to Labour, Britain’s youth unemployment rate has topped the eurozone for the first time ever. Graduates coming out of university cannot get jobs. Graduates in work are seeing their student debt mounting up.

[Dr Neil Hudson (Epping Forest) (Con)]

I have been contacted by many students in Epping Forest who are deeply concerned about their future debt and by many graduates who are worried about ballooning debt on these plan 2 loans. Does my right hon. Friend agree that the Labour Government have an opportunity to step in and relieve the pressure on young people and adopt the Conservative plans to scrap real interest rates on these plan 2 loans?

[Laura Trott]

My hon. Friend is absolutely right. We have a chance today to create a new deal for young people. I hope that some Government Members vote for it.

[Helena Dollimore (Hastings and Rye) (Lab/Co-op)]

I must declare an interest as someone in the first year group to have a plan 2 student loan under the broken system introduced by the Conservatives and the Liberal Democrats that we have today. Will the right hon. Member apologise to my generation for £9,000 tuition fees, for the broken system she created and for failing to introduce the Renters’ Rights Act 2025 that this Government have acted to introduce?

[Laura Trott]

If the hon. Lady thinks the system is broken, I invite her to vote for our motion.

Every metric for young people has got worse since this Government came in. It is crystal clear that for young people, as for the rest of the country, Labour is not working.

[Graham Stuart (Beverley and Holderness) (Con)]

My right hon. Friend will have noted, as I have, that the hon. Member for Hastings and Rye (Helena Dollimore), the hon. Member for Hartlepool (Mr Brash) and other Labour Members wish to talk about the past. Our constituents, and graduates who are paying these outrageous sums, want to talk about the future. At the general election, they listened to Labour’s promises on lowering costs for graduates, but the Government are doing exactly the opposite. By deflecting and talking about the past rather than accepting responsibility for the government that they are delivering, Labour Members are letting down all those young people, whose aspirations should be respected.

[Laura Trott]

My right hon. Friend is quite right: not only did Labour mislead the public, but it then made things worse. Now, Labour Members will not vote to fix it. That is Labour all over.

We need a plan to fix the problem, but it is not enough to fiddle with one part of the problem. We need comprehensive change, and that is exactly what we Conservatives have come up with: a new deal for young people. The plan, which could be implemented today, would reverse the threshold freeze, make interest rates for plan 2 loans inflation-only, stop dead-end degrees, and boost apprenticeships so that young people have real choice when they leave school, not a future weighed down by debt.

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

The right hon. Lady talks about a comprehensive plan and giving people choices, but this is not a comprehensive plan for student loan reform; it is a plan written on the back of a fag packet. It basically revolves around restricting university access, which is always the go-to solution for the Conservatives. In truth, it will mean that people like me—I was the first person in my family to go to university—will not get to go to university. People who go to Brunel University in my constituency will face restrictions in course levels. That is not a widening of opportunity and choice, but a restriction of them.

[Laura Trott]

No, the plan would massively widen choice. At the moment, the number of young people who want to start apprenticeships is much smaller than the number of apprenticeships available—we need to change that and the system. It is not good enough for the Government to table an amendment to our motion stating that they will make the system fairer and financially sustainable, when they are making it less fair and less financially sustainable.

At the moment, the system is punishing aspiration, and that is demoralising for young people. They leave university having done everything that was asked of them. They work hard and get a promotion, and then the interest on their loan goes up. They pay back far more than they ever borrowed. A typical plan 2 graduate needs to earn £66,000 a year just to keep pace with the interest. Young people should not be punished for doing the right thing.

[Helena Dollimore]

The right hon. Lady talks about making the system fair. Will she comment on what her party did in government? The Conservatives abolished the maintenance grant, which means that low-income students have bigger debts and have to pay back more. This Labour Government have acted to bring back the maintenance grants that her party took away.

[Laura Trott]

The Chancellor said that the system was fair and reasonable—what a joke! The Government do not recognise the scale of the problem, but we do, and we have come up with a plan to fix it. What is their plan? It does not exist.

[Dr Andrew Murrison (South West Wiltshire) (Con)]

Vacancies for graduates have gone down precipitously this year compared with the same time last year. That should worry those of us who are interested in the future. How can we rebalance the offer to young people so that they are not sold a pup—as they have been by consecutive Governments over many years—in relation to what a degree will mean for their future career prospects? How can we ensure that our incredibly valuable further education sector is supported—probably at the expense of some of our lesser universities?

[Laura Trott]

My right hon. Friend is absolutely right: there is nothing progressive about letting a young person take a university degree that has negative returns for them. That is not fair or right, and we should fix it.

The problem is not just the loans, but a system that funnels young people into university courses that do not get them jobs and do not allow them to repay their loans. The Institute for Fiscal Studies says that 30% of university degrees have negative returns for those who study them. It is not just that they do not help, but that they have negative returns. It is worse for those students to go to university—that is not progressive.

Some 75% of the value of loans for creative arts courses is not paid back. Creative arts is an engine of the UK economy, but too many courses just do not deliver jobs in the industry that they purport to serve. It is a mis-selling scandal where brochures promise a glittering career, but the courses deliver nothing but debt and a dead end. That is not right. Of course, creative arts courses that actually lead to jobs should continue, but those who are selling a lie do not have any place being taxpayer funded.

The consequences of this broken system are already becoming clear. According to the Centre for Social Justice, more than 700,000 graduates are currently out of work and claiming benefits. That should concern every Member of this House.

[Dr Luke Evans (Hinckley and Bosworth) (Con)]

Is my right hon. friend also concerned by the fact that, last year, the Office for National Statistics said that 257,000 people left the UK, up from an expected 77,000? Three quarters of those people were under the age of 35. That shows that young people are fleeing this country to look elsewhere for work. Does she share my concern that that is the case?

[Laura Trott]

My hon. Friend is, as ever, absolutely right. Opportunity should be created for young people here, not in other countries, and that is what we want to create.

[Graham Stringer (Blackley and Middleton South) (Lab)]

It is a long time since I went to university, but there was a belief then that the least important things we got out of it were degrees and job prospects. There was a value in education itself. The right hon. Lady seems to think that the only reason to go to university is mercenary.

[Laura Trott]

It seems like the hon. Gentleman was at university only yesterday. If we are asking young people to take on a mountain of debt, it is important for them to know that they will get a job and have prospects afterwards. I do not think that is an unreasonable proposition, and it is one that I will argue for.

[Alicia Kearns (Rutland and Stamford) (Con)]

I was of the Tony Blair generation. We were told that unless we went to university, we were a failure, and that everyone should be able to go to university. That was fundamentally wrong; it led to a two-tier system where those who did not go to university were asking why not. I remember young people at my sixth form asking, “Am I not as bright? Do I not have the same prospects?” They should have been encouraged and supported. For example, my brother went into carpentry while studying philosophy at Birmingham. He could have started his career at a much earlier point. By rebalancing, we are giving the right recognition to the skills and training needed earlier, rather than pushing people into unnecessary debt traps.

[Laura Trott]

My hon. Friend is spot on. It is not well known that apprenticeship degrees are more oversubscribed than Oxford and Cambridge. These are things that young people want to do, and that is why we are trying to expand them. Instead of celebrating the expansion of low-value degrees, the Government should ask whether it is right to continue pushing young people down a path that leaves them with debt but no clear prospects.

[Madam Deputy Speaker (Caroline Nokes)]

I call John Slinger. [Hon. Members: “Hear, Hear!”]

--- Later in debate ---

[John Slinger (Rugby) (Lab)]

I am grateful to hon. Members for giving me such support. The right hon. Lady makes the point that creative arts subjects are perhaps not providing young people with job prospects. Would she not concede that we need people with creative arts skills and experience in our society and economy? The sector contributes £124 billion to our economy. What we need is what this Government are doing: investing in the creative arts sector. We need people who are skilled and trained in that sector so that they can do those jobs. She is offering only a litany of woe.

[Laura Trott]

I do not know whether the hon. Gentleman was listening when I covered that point. The whole point is that those degrees do not lead to jobs in the creative arts industry. It is a mis-selling scandal. They promise a glittering career in the creative arts and do not actually deliver it. I think that is a problem, and I am sad that the hon. Gentleman does not think that.

What are students receiving in return for these enormous fees?

[John Slinger]

Will the right hon. Lady give way?

[Laura Trott]

I will not. When the hon. Gentleman tried to intervene on me recently, he accused me of jumping on a bandwagon about rape gangs, so he will forgive me for not taking another intervention from him.

Too often, students are receiving minimal face-to-face teaching, limited supervision and a university experience that falls far short of what was promised. This is not a fair system and it is not a sustainable one either.

[Robin Swann (South Antrim) (UUP)]

The right hon. Lady says that the system is unfair. Does she agree that charging interest rates during maternity and paternity leave is also unfair? It disadvantages people in the workplace, especially women, who have worked hard to get into progressive careers through university education, and they are penalised at that point.

[Laura Trott]

I am glad that the hon. Gentleman raises that point. I totally agree with him that it is something that needs to be looked into and fixed.

As I have mentioned, we know that 10 times as many young people want an apprenticeship at 18 as there are places available. The demand is there, but the places are not. To me, it makes complete sense to move from funding dead-end courses at universities to giving young people the opportunity to do an apprenticeship that will get them into a job, and they will emerge from that apprenticeship with no debt. We want fundamental change to the system so that at 18, young people have a choice between a high-quality university place, an apprenticeship or going into work. That is a Conservative choice.

What is Labour’s response to that proposal? Last weekend, the Government announced that they will compensate for some of the mess that they created in the form of youth unemployment when they hiked up employer national insurance contributions, but they are robbing Peter to pay Paul—exactly the sort of economic thinking that we have come to expect. They are punishing employers with a jobs tax, which one of the Cabinet finally admitted this week has caused a huge spike in unemployment, and they are giving back £3,000, but only to those who have been on universal credit for six months. Fiddling with a system that needs fundamental reform and clearing up the mess of the Chancellor’s Budget is almost a full-time job for this Government.

The Conservatives are the only party putting forward a serious plan to help young people, whether by abolishing stamp duty for first-time buyers or through our new deal.

[Laurence Turner (Birmingham Northfield) (Lab)]

The motion in the right hon. Lady’s name states that

“balances will never rise faster than RPI inflation”.

She was a senior Treasury Minister. Does she share my regret at the decision to suspend routine methodological improvements to the retail prices index, which led to the gap between the RPI and the lower consumer prices index rates more than doubling?

[Laura Trott]

As ever, the hon. Gentleman raises a very interesting point, and I look forward to his bringing it up with the Chancellor at questions.

[David Reed (Exmouth and Exeter East) (Con)]

I say to Labour Members that we all want to get this issue sorted out. When I spoke to the Chancellor during the spring statement, she said that the way that she was going to control student loan interest rates was by controlling inflation, but we all know what is happening in the middle east at the moment. Does my right hon. Friend agree that that policy is wishful thinking and that we need to think about the issue properly in order to change the system?

[Laura Trott]

Exactly. The Chancellor gave it all away when she said that young people are at the back of the queue—that tells us all that we need to know about this Government.

The Government amendment is the usual mishmash of nothingness, and I suspect many Labour Members are disappointed. The amendment welcomes

“the Government’s commitment to make the system fairer and financially sustainable”,

even though the only thing that the Government have done so far, which is the threshold freeze, has made the system less fair and less sustainable for young people. But don’t worry, there is more. Labour Members are today going to welcome a “target”—not any action lines, but a target—even though it is a target that the Government are currently missing, as the share and volume of under-25s starting apprenticeships in the last academic year have fallen. What a mess!

We need a different approach. The Conservatives believe that the system needs fundamental change. We believe that students should not be mis-sold degrees that promise the earth and deliver nothing but debt, that the freeze on thresholds is wrong, that students on plan 2 loans should only pay interest at inflation, and that young people deserve a new deal. That is what we are asking the Government to vote for today, so that young people will be put not to the back of the queue but to the front of it.

--- Later in debate ---

[Georgia Gould]

We have acknowledged the issues and the unfairness in the system. The Prime Minister, the Chancellor and the Secretary of State for Education have acknowledged that, and we have said that we will look at it.

I will make progress. Under the last Government, the number of young people not in education, employment or training rose by 250,000. Today, nearly 1 million young people are not in education, employment or training. That is the legacy of the Conservatives, but this Government are turning that around. We are renewing the post-16 education landscape and celebrating routes into vocational education not by restricting university, but by opening up new high-quality vocational routes. We are introducing new V-levels and new foundation apprenticeships and supporting students to get excellent university education across the country.

The Opposition talk a lot about higher education and suggest that too many young people go to university. It is interesting that they can never tell us who should no longer go or which courses they should not study.

[Laura Trott]

I just told you!

[Georgia Gould]

Did the right hon. Member tell me who should not go to university? I can tell the Conservatives that when they close the drawbridge, it is pupils from disadvantaged backgrounds who will end up not at university. That is the consequence. We are opening up access to apprenticeships and vocational routes not by closing down university routes, but by opening up other routes.