Members of Parliament have stated that comparing student loan repayments to phone contracts or cinema tickets constituted "mis-selling" by the government. A new report from the Treasury Committee also found that students were not adequately informed about the possibility of their loan terms changing retrospectively.
The committee called for the government to reverse its decision to freeze the income threshold at which some graduates begin repaying their loans. Last year, Chancellor Rachel Reeves announced that the repayment threshold for Plan 2 loans would remain at £29,385 between 2027 and 2030, instead of increasing with inflation. Plan 2 loans were issued to students in England between September 2012 and July 2023, and are still issued in Wales. Graduates with these loans repay 9% of their earnings above the threshold.
Freezing the threshold means graduates will start repaying their loans sooner, or will pay more over time as their salaries rise with inflation while the repayment threshold remains fixed. The committee's report referenced a BBC investigation that found the government used comparisons to "£30-a-month phone contracts" in promotional materials aimed at teenagers a decade ago. The report stated that because these comparisons were "inaccurate for higher earners," they "amounted to mis-selling."
While acknowledging that the government's student loan policies are exempt from consumer protection laws, the committee emphasized its expectation that the government should adhere to "not only the law, but basic fairness and common decency."
Both the government and the Student Loans Company acknowledged the committee's report, with a spokesperson for the Student Loans Company stating they "recognise the importance of ensuring that students and borrowers across all repayment plans have access to clear, accurate and timely information about student finance." A government spokesperson added that ministers are "already taking decisive action" and will "continue to look for ways to make the system fairer for students, graduates and taxpayers in a financially sustainable way."