More than 120 members of Parliament and peers have urged the UK government to reform the student loan system, describing it as an "unsustainable and unfair financial burden" on millions of graduates. The group, which includes representatives from Labour, Conservative, Liberal Democrat, and Green parties, signed an open letter addressed to Chancellor Jeremy Healey, calling for a review and overhaul of the current repayment structure.
The letter, coordinated by the campaign group Rethink Repayment, criticizes the existing arrangement whereby graduates repay 9 percent of their income above a set threshold. MPs and peers warn that the system imposes excessive financial pressure, particularly as the average student debt now stands at approximately £53,000 for English students. They argue this debt acts as a barrier rather than an investment in graduates' futures.
Lucy Powell, the Education Secretary, acknowledged the issue recently, noting it is a priority on her agenda. Earlier this year, she described the interest rates on student loans as "egregious." The government has faced growing calls for reform following a high-profile media campaign and a subsequent parliamentary inquiry. The inquiry, which examined the student loan framework, found that promotional materials issued by government bodies could be considered mis-selling if produced by regulated private companies.
Among the signatories are former Education Secretaries Sir Gavin Williamson and Kit Malthouse, as well as Baroness Warwick of Undercliffe, former chief executive of Universities UK. Labour’s shadow education secretary Laura Trott also backs the call for urgent reform. Jas Athwal, Labour MP for Ilford South, described the loans as having become “a tax on aspiration” rather than an investment. Conservative MP David Reed of Exmouth & Exeter East highlighted how the repayments, on top of high living costs, job market uncertainty, and taxes, place an unfair additional financial burden on graduates.
The student loan repayment system has multiple tiers and interest rate arrangements that vary depending on when the loan was taken out. Plan 2 loans, which cover students who began university between 2012 and 2023, charge interest at the retail prices index (RPI) plus up to 3 percentage points, depending on income. These loans have been especially criticized due to the government's decision last year to freeze the repayment threshold at £29,385 for three years—the third such freeze affecting Plan 2 borrowers. In April, the government introduced a cap on Plan 2 loan interest rates, limiting them to a maximum of 6 percent.
The recent parliamentary inquiry recommended reversing the repayment threshold freeze, arguing that the original loan terms promised that thresholds would increase in line with earnings to maintain affordability. The inquiry’s findings have intensified demands for the Treasury and Department for Education to work with MPs from all parties to develop a more equitable student finance system.
Liberal Democrat MP Munira Wilson, a signatory to the letter, urged parliament to move beyond “piecemeal changes” and collaborate to create a system that allows graduates to "get on with their lives" without being burdened by excessive debt. Oliver Gardner, founder of Rethink Repayment, underscored the breadth of political consensus, stating that the issue has crossed party lines due to its pressing importance.