Question to the Department for Education:

To ask the Secretary of State for Education, what assessment she has made of the potential impact of freezes to the Plan 2 student loan repayment threshold on recent graduates.

Plan 2 loans were designed and implemented by previous governments, and we are having to make hard choices to balance taxpayer and borrower interests to ensure that the student finance system remains sustainable.

Student loan repayments are linked to income, not to the amount borrowed or interest applied. The repayment threshold will rise in April 2026, to £29,385 which is a higher rate than the average graduate salary three years after graduation. As repayments remain income-contingent if a borrower’s salary remains the same, their monthly repayments will also stay the same. Repayments are made at a constant rate of 9% above the earnings threshold, and the 9% rate strikes a balance between affordability for graduates and fairness to taxpayers. Even with the freeze, in year one the average borrower on a Plan 2 loan will repay around £8 more than had the freeze not been enforced.

Those earning below the earnings threshold do not make repayments. Any outstanding loan including interest built up, is cancelled at the end of the loan term with no detriment to the borrower, and debt is never passed on to family members or descendants. This is a deliberate government investment in students and the economy.