MPs say 'Government has a moral duty to reverse next April's Plan 2 Student Loan repayment threshold freeze' – Martin Lewis says even then the student loan system will still be broken
MPs have declared the Government holds a moral duty to reverse the freeze on Plan 2 student loan repayment thresholds set for next April, though financial expert Martin Lewis warns
By MoneySavingExpert
MPs have declared the Government holds a moral duty to reverse the freeze on Plan 2 student loan repayment thresholds set for next April, though financial expert Martin Lewis warns the system will remain broken even if the change is made. The cross-party Treasury Committee of MPs reached this conclusion after reviewing 52,000 submissions from the public regarding student loans.
The committee stated the Government has a "moral obligation" to honour the promises made to graduates when they took out their loans, particularly those with Plan 2 agreements. Last year, Chancellor Rachel Reeves announced that the repayment threshold for Plan 2 loans would be frozen at £29,385 between 2027 and 2030, rather than rising with inflation.
A parliamentary inquiry found that these loans were promoted to students in "deeply problematic" ways and that graduates were not adequately informed that their loan terms could change retrospectively. Martin Lewis, the founder of MoneySavingExpert, commented that while reversing the freeze is necessary, the student loan system itself will still be broken even if the Government acts on the MPs' recommendation.
The committee chair, Meg Hillier MP, has spoken to the New Statesman about how these loan impacts affect young people's financial decision-making. Ministers are facing growing criticism over how they have handled repayment terms for graduates, with the committee urging the Government to scrap the three-year threshold freeze and address the "unfair and broken" nature of the current system.