Question to the Department for Education:

To ask the Secretary of State for Education, if she will increase the student loan repayment thresholds in line with inflation.

The student finance and funding system must provide value for money for all of society at a time of rising costs. It is important that a sustainable student finance system is in place, that is both fair to students and fair to taxpayers. The department is freezing maximum tuition fees for the 2023/24 and 2024/25 academic years. By 2024/25, maximum fees will have been frozen for seven years.

The repayment of student loans is governed by the Education (Student Loans) (Repayment) Regulations 2009 (as amended). These set out that borrowers starting full time undergraduate courses from 1 August 2023 on the new Plan 5 student loan will be required to make repayments from April 2026, once they have left study, and only then when they are earning over the repayment threshold of £25,000 per year, which will be adjusted annually by the Retail Price Index (RPI) thereafter.

For existing undergraduate borrowers on Plan 2 student loan, the annual repayment threshold will stay at £27,295 up to and including financial year 2024/25. Thereafter, annual adjustment of the Plan 2 repayment threshold will be based on RPI. The annual repayment threshold for Plan 3 postgraduate borrowers remains at £21,000.

We will continue to keep the terms of the student finance system under review to ensure that they keep delivering value for money for both students and taxpayers.

Student loans have significant protections for those making loan repayments, including for lower earners and borrowers who experience a reduction in their income. Borrowers are liable to repay only after leaving study when earning over the relevant repayment threshold. At any time, if a borrower’s income falls below the relevant repayment threshold, or a borrower is not earning, their repayments stop. Any outstanding debt, including interest accrued, is written off after the loan term ends, or in case of death or disability, at no detriment to the borrower. There are no commercial loans that offer this level of protection.

If, at the end of the year, the borrower’s total income is below the relevant annual threshold, they may reclaim any repayments from the Student Loans Company made during that year.