Concerns have been voiced among MPs over the state of the student loans system following the announcement last year of increased tuition fees for English universities and a freeze to the graduate repayment threshold. Speaking in Parliament on the 25th February, Keir Starmer claimed to be looking at ways to make the current student loans system “fairer”.
Last October, Education Secretary Bridget Phillipson announced annual increases to tuition fees at English universities in line with inflation, alongside a proportional increase of maintenance loans available to students. University tuition fees were raised this academic year, after being frozen since 2017. At the time of the announcement, the University of Oxford indicated its support for the increases.
In the November budget last year, Rachel Reeves, Chancellor of the Exchequer, announced that the salary threshold at which graduates start repaying their Plan 2 student loans would be frozen at its April 2026 level of £29,385 until 2030, rather than increasing in line with inflation. Plan 2 student loans were in effect for those who started university between September 2012 and July 2023; whereas the interest rate for those who started university later is 4.3%, for these earlier loans it is the RPI rate (currently 3.8%) plus up to an additional 3%.
Furthermore, a 6% levy on international student tuition fees in English universities is set to be introduced from 2028, in order to fund new maintenance grants of £1000 for those from low-income households taking certain courses.
The government is facing pressure to change the current system after other political parties announced their opposition to it when the issue was raised at Prime Minister’s Questions last week. Over 20 Labour MPs spoke out against the student loans system last week. Luke Charters, MP for York Outer, called current graduates’ predicament “a dog’s dinner”, while some politicians called for tuition fees to be scrapped completely. The Green Party and the Conservative Party both pledged to cut interest rates on student loans.
Layla Moran, the Liberal Democrat MP for Oxford West and Abingdon, told Cherwell: “Freezing the student loan repayment threshold is a stealth tax on graduates. At a time when young people are battling sky-high rents and a brutal job market, the last thing they need is the Government quietly taking more from their pay packets. The whole system needs fixing.”
Annaliese Dodds, current Labour MP for Oxford East, was contacted for comment. A graduate of St Hilda’s College, she led protests during her time at university against the tuition fees introduced by New Labour in 1998.
