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Over 120 members of Parliament and peers have come together to urge the chancellor to undertake an immediate review of the student loan repayment system. This call was made through an open letter organized by the campaign group Rethink Repayment, which highlights that the existing framework imposes an “unsustainable burden on the next generation of workers.” The letter reflects concerns shared across party lines and includes MPs who hold Plan 2 student loans—loans which have faced particular criticism in recent months.
Education Secretary Lucy Powell recently described the interest rates on Plan 2 loans as “egregious” and indicated that addressing this issue is a priority for her department. Student loan arrangements vary depending on the student’s location within the UK and the period when they attended university. Although the letter addressed to Chancellor John Healey does not pinpoint a specific loan plan or region, the focus has been mainly on Plan 2 loans. These loans were taken out by students in England between September 2012 and July 2023 and continue to be issued in Wales, with repayments set at 9% of earnings above the repayment threshold.
The letter argues that “successive governments’ adjustments to repayment thresholds – together with high interest and marginal tax rates – are placing an unsustainable burden on the next generation of workers.” It also points out that many middle-income graduates lose nearly half of any salary increase due to the combined effects of income tax, national insurance, and student loan repayments. Signatories emphasize a shared belief that the repayment system requires urgent reconsideration to ensure fairness, sustainability, and support for individuals’ aspirations.
Among the MPs signing the letter are Laura Trott, the Conservative shadow education secretary, and Munira Wilson, the Liberal Democrat education spokeswoman. Liberal Democrat MP Tom Gordon, who also signed, expressed his pessimism about fully repaying his Plan 2 student loan, expecting instead that his debt will be wiped after 30 years as per repayment conditions. He questioned the fairness of the system, remarking, “If someone earning an MP’s salary still isn’t likely to repay their student loan in full, what chance does someone on a much lower income have?” Gordon further criticized government changes to repayment terms and interest rates imposed after loans were signed, saying such retrospective adjustments would be unacceptable from any bank or mortgage lender.
Oliver Gardner, founder of Rethink Repayment, noted that the letter demonstrates how the student loan crisis transcends party politics. He called for a fairer system that frees millions of graduates from overwhelming debt burdens. Responding to these concerns, a Department for Education spokesperson acknowledged that the inherited loan system is flawed and unfair, affecting some graduates more than others. They reaffirmed a commitment to improve the student loans system and mentioned that the government is currently considering its response to the Treasury Committee’s inquiry
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