5 days ago

An inquiry by MPs into the student loan system in England has begun, with evidence from student organisations and experts.

The National Union of Students (NUS) said the inquiry should look at the graduate earnings repayment threshold and interest rates.

But the government said the current student loan system protected lower-earning graduates, with repayments linked to earnings and loans written off at the end of their term.

New research published separately suggests a third of people now think a university degree isn't worth the time and money.

The British Social Attitudes survey has tracked public opinion over key issues, including university education, for decades.

Their research, published on Tuesday, found that 34% of people in 2025 agreed a university education "just isn't worth the amount of time and money" - up from 14% in 2005.

This is the highest level of concern about the value of a degree for 20 years.

At the same time, there has been a decline in those who believe going to university leaves graduates "a lot better off" in the long run, down from 50% in 2005 to 36% in 2025.

Against that background of wider public unease, the Treasury Select Committee of MPs will hear the concerns of graduates about the size of their debts, and the interest rates.

Among those most worried are graduates who took out what are called Plan 2 loans between 2012 and 2023.

Gemma, who now works for a tech company, is one of those graduates who contacted the BBC through Your Voice to share her frustration.

Just after she graduated in 2016, her debt was £34,105 - but her latest balance statement shows it's now £41,908 because the interest accumulating is outstripping her repayments.

Gemma said her degree was worth it, taking her from a low-income background into a job where she now earns just under £50,000 a year, but living with the loan is "draining".

"It feels like I'm constantly chasing a debt that gets bigger over time; it feels like climbing a mountain."

Now 33, she said student loans have contributed to a decision to delay starting a family with her partner, because even though she wouldn't repay during maternity leave, the interest would still accrue.

At the end of the 30 years any unpaid loan will be cleared, effectively by the taxpayer.

The strength of feeling from graduates like Gemma is clear. More than 50,000 people have submitted written evidence to MPs, with many graduates saying they did not understand the terms of their student loans when they signed up.

Graduates in England repay 9% of whatever they earn over a threshold, which is due to be frozen at £29,385 from April 2027 for three years - with the result that more graduates will start repaying earlier.

The NUS is asking the government to rethink that decision.

The graduate campaign group Rethink Repayment said the repayment threshold freeze was against the original terms of the student loans.

Alex Stanley, from the NUS, said there also needed to be a longer term "course correction" to avoid a generation not being able to buy a home or start a family.

There is no getting away from the fact that the labour market is challenging, said Vivienne Stern MBE, Chief Executive of Universities UK, but that data shows graduates "are more likely to have a job, earn more and have better health".

She added: "A university education doesn't just benefit the individual. If we want our country to grow, we need more graduates entering the labour market."

Speaking to MPs at the student loans inquiry on Tuesday, Sir Philip Augar, who chaired the 2019 panel reviewing post-18 education in England, said he believes "there needs to be a correction" for Plan 2 loans.

He argued that it is a moral responsibility for the government "not to alter the terms and conditions as we go along". Changing the terms of student loans in "complicated, almost sneaky" ways, bit by bit under different government administrations has led to the current situation, he added.

Vivienne Stern MBE, Chief Executive of Universities UK, said the student loans system has to feel fair and transparent.

She and the other panellists also argued for a better balance between the state and individual's responsibility when it comes to student loan repayments. Stern said it should be thought of as an investment by the state, which needs graduates.

Sir Philip and Stern also called for the student loan repayments website to draw graduates' attention to the monthly repayments they actually pay, rather than the "very big number" of the overall debt. This would help address the psychological burden, they said.

Speaking in the second inquiry session, Alex Stanley from the National Union of Students (NUS) said reversing frozen repayment thresholds was their priority in the immediate term, after hearing from hundreds of students the "real, serious challenge" it has put on young people.

"This is a generation of graduates who are struggling to talk about pensions, mortgages or starting a family," he said. He added that "fixing the foundations" of Plan 2 loans would reinstate trust in the sector from prospective students and their families going forward.

Oliver Gardner, founder of Rethink Repayment, said he believes there is an "inter-generational crisis", with fewer people now able to buy houses or save for pensions, whilst also potentially looking at paying off their student loans into their 60s. This could create a "substantial" burden on the state, he argued.

The government has defended the decision to freeze the repayment threshold and has capped the interest rate on Plan 2 loans at 6%.

In a statement it said: "We recognise that some graduates have concerns about the cost of student loan repayments and understand why this is an important issue."

It added it had raised the graduate repayment threshold since coming into government for the first time since 2021, and brought back some targeted maintenance loans.