Question to the Department for Education:

To ask the Secretary of State for Education, what steps she is taking to support individuals on student loan plans (a) 2 and (b) 4.

Decisions on student finance have to be taken alongside other spending priorities to ensure the system remains financially sustainable and the costs of higher education (HE) are shared fairly between students and taxpayers, not all of whom have benefited from going to university.

The government has continued to increase maximum loans and grants for living and other costs for plan 2 student loans each year. Maximum support has been increased by 2.3% for the 2022/23 academic year, with a further 2.8% increase announced for 2023/24. In addition, the department is freezing maximum tuition fees for the 2023/24 and 2024/25 academic years to deliver better value for students and to keep the costs of HE under control. By 2024/25, maximum fees will have been frozen for seven years.

The government recognises the additional cost of living pressures that have arisen this year and that are impacting students. The department has made £276 million of student premium and mental health funding available for the 2023/24 academic year to support successful outcomes for students, including disadvantaged students.

Student loans are available to all eligible students, irrespective of background or financial history, and include significant protections. Monthly student loan repayments are calculated by income rather than by interest rates or the amount borrowed. If a borrower’s earnings are below the relevant repayment threshold, they will not be required to make any repayments. At the end of the loan term, or in case of death or disability, any outstanding loan debt, including interest accrued, will be written off at no detriment to the borrower. No commercial loans offer this level of protection. To further protect borrowers, where the government considers that the student loan interest rate is too high in comparison to the prevailing market rate, it will reduce the maximum plan 2, plan 3 and plan 5 interest rate.

Plan 4 student loans are issued by the Scottish Government, which has responsibility for HE in Scotland and determines the student finance arrangements for Scottish students.