MPs join forces to call for ‘urgent review’ of student loans

More than 120 politicians have urged the UK’s new chancellor to conduct an “urgent review” of student loan repayments.

Shadow education secretary Laura Trott has joined forces with her Liberal Democrat equivalent, Munira Wilson, and Labour MPs Sadik Al-Hassan and Jas Athwal to express “growing concern” about the system’s “unsustainable burden on the next generation of workers”.

Their intervention, addressed to the recently appointed chancellor John Healey, comes after a report from the House of Commons’ Treasury Select Committee described the English student loan system as “unfair” and called for a three-year freeze to the repayment threshold imposed in last year’s autumn budget to be reversed.

The committee also accused the government of mis-selling the loans, after its inquiry into the regime received hundreds of responses from angry graduates. Criticism has focused mainly on the impact of so-called Plan 2 loans – those taken out between 2012 and 2023 – which critics have described as a de facto tax on graduates.

New education secretary Lucy Powell last week said she would “look into” the issue, although she emphasised she could not promise change.

The letter, coordinated by campaign group Rethink Repayment, has been backed by a cross-party group of 121 MPs and peers, who say they are “hearing from young teachers, nurses, engineers, and entrepreneurs who are facing historically high effective marginal tax rates”.

Among those to put their name to the message include former education secretary Gavin Williamson, former Green Party co-leader Carla Denyer, former shadow chancellor John McDonnell and Conservative policy tsar Neil O’Brien.

The letter tells Healey that many middle-income graduates “see less than half of any hard-earned pay rise” thanks to the combination of income tax, National Insurance, and student loan repayments.

It stresses that signatories still believe in higher education as a “vital pathway” for both personal advancement and the UK economy, and asks the chancellor to commit to a meeting with the letter’s sponsors to discuss how to support graduates better while maintaining a “responsible fiscal approach”.

“At a time when the cost of living remains a primary concern, this significantly diminishes disposable income, delays milestones such as first-time homeownership and family formation, and disincentivises career progression,” the letter says of the current system.

“We are united in the belief that the current repayment framework requires urgent review, as indicated by the Treasury Select Committee’s recent inquiry recommendations, to ensure it is fair, sustainable, and supportive of aspiration.”

Sharing the letter, Oliver Gardner, founder of Rethink Repayment, said: “The student loans crisis is no longer a partisan issue. When 121 parliamentarians from across the political spectrum come together on one issue like this, it shows how important it really is.”

He went on: “The education secretary has said the system needs looking at, and the Treasury Select Committee has already concluded that the current framework is unfair.

“We believe that now is the time to create a system that is fair and that unshackles millions of graduates from mountains of student loan debt.”

georgia.luckhurst@timeshighereducation.com