MPs Call for Reversal of Student Loan Threshold Freeze

A cross-party group of MPs has called for the next Treasury chief to end a three-year freeze on student loan repayment thresholds. The Commons Treasury Committee issued the recommendation in its latest report. The freeze, announced in the October budget, will keep the repayment threshold at £29,385 from 2027 through 2030.

Graduates with Plan 2 loans issued in England between September 2012 and July 2023 will continue to repay 9 percent of earnings above that level.

The report stated that the student loan system is layering stress on people in their 20s and 30s. It described the threshold freeze as a way of shifting fiscal burdens onto younger generations. The committee also identified three practices it said amounted to mis-selling: Department for Education YouTube videos that did not disclose retrospective changes to loan terms, advertisements comparing repayments to mobile phone bills or cinema tickets, and unclear information from the Student Loans Company about the government's ability to alter terms.

Reversing the freeze would cost £355 million by the 2029–30 financial year, the MPs said. They urged ministers to commit to the reversal in the next autumn budget. A Government spokesperson said the report lays bare the confused and broken system inherited by this Government.

A Student Loans Company spokesperson said the company recognizes the importance of providing clear and accurate information to borrowers. The Government announced earlier this year that interest on the loans will be capped at 6 percent from September.