Reforming ‘broken’ student loans ‘not front of queue’ – Reeves

The UK chancellor has warned that the student loan system is “broken” but reforming it is not the government’s top priority. 

Answering questions after delivering the annual Mais lecture at Bayes Business School, Rachel Reeves said there was an “awful lot” broken when the Labour government came into power in 2024.

Along with student loans, she cited NHS waiting lists of 8 million, a prison system “full to bursting” and a defence budget that did not meet the needs of an increasingly unstable world.

“The student loan system is broken,” she admitted. “But if you try to fix everything straight away, everything will fall over.

“We have precarious public finances, and that has also been thrown into stark relief in the last few weeks since the conflict in the Middle East erupted.”

Reeves said the government was reintroducing maintenance grants for the poorest students going to universities, and was investing heavily in further education and apprenticeships.

The MP for Leeds West and Pudsey said the fact one in six children are not in education, employment or training was a greater concern than the student loan system.

“So yes we want to fix it, yes we want to make improvements. But is it front of the queue? No, it’s not.

“Politics is about priorities. I’m not denying there’s a problem. I’m not blind to that. But what I do say is there has to be some patience, you can’t fix everything straight away.”

Reeves said she “strongly disagreed” with anyone who suggested that the Starmer premiership should have focused on reforming student loans before tackling child poverty.

In her speech, Reeves had praised the “entrepreneurial culture” of the UK, citing its immense potential in the industries of the future – including life sciences, energy, and artificial intelligence.

“The UK is in a position of real strength, with world-leading universities, deep research capability from Edinburgh to the west of England – backed by record R&D investment strategically targeted at frontier technologies, and one of the most vibrant AI start-up ecosystems anywhere outside the United States.

“Every major AI lab is either establishing or expanding here in the UK. UK AI startups raised £6 billion in venture capital last year and, just three months into 2026, they’ve already raised more than half of that figure again.”

patrick.jack@timeshighereducation.com