UK Treasury Committee Says Student Loan Comparisons Amounted to Mis-Selling and Calls for Repayment Threshold Reversal

A UK parliamentary committee has concluded that government comparisons of student loan repayments to phone contracts or cinema tickets amounted to mis-selling. The Treasury Committee report stated that students were not informed clearly enough that loan terms could change retrospectively.

The committee called for a reversal of the decision to freeze the income threshold for Plan 2 loan repayments at £29,385 from 2027 to 2030.

Chancellor Rachel Reeves had announced the freeze last year, replacing the prior policy of annual increases with inflation. Graduates with these loans repay 9 percent of earnings above the threshold. BBC News reported that the committee referenced its own earlier investigation showing promotional presentations a decade ago that likened repayments to £30 monthly phone contracts.

The report said this framing was inaccurate for higher earners and expected the government to follow basic fairness despite exemption from consumer protection laws. Both the government and the Student Loans Company described the committee's work as an important contribution to the debate.

A government spokesperson said ministers were already taking decisive action to make the system fairer for students, graduates and taxpayers.

Plan 2 loans were issued to students in England from September 2012 to July 2023 and remain available in Wales. In 2023 they were replaced in England by Plan 5 loans, which carry a lower repayment threshold of £25,000 and are written off after 40 years instead of 30. The committee said the change shifted repayment burdens from highest earners toward all borrowers.

Thousands of respondents to the inquiry said they had not fully understood loan terms before signing. Treasury Committee chairwoman Dame Meg Hillier described the scale of frustration as powerful. Campaigners and borrowers echoed the findings.

Oliver Gardner of Rethink Repayment said the inquiry confirmed what campaigners had known for years and that the system was unfair and unsustainable. Laura-May Nardella, a 31-year-old Cambridge graduate, said her 2025 repayments exceeded £3,000 while her debt continued to rise at 6.2 percent interest.

Architecture student Emma Cook, who owes £50,000, said she had applied for dozens of placements to begin repayments sooner.