Whether to pursue a master’s degree was not really a choice for Francesca Peters. Fresh from an undergraduate degree in biochemistry in 2020, she had set her sights on securing her dream job. There was a catch, however. The only route into her chosen field was further study – and more debt.

She had finished university with more than £60,000 in student debt but another loan to fund her master’s meant this spiralled to £77,000. “It just feels like a life tax,” she says. “Because I’m never going to pay it off.”

Peters, 27, is one of a growing number of people calling on the UK government to reform the student loan system. In the past year, criticism has been mounting over the “unfair” terms of plan 2 loans, taken out by millions of undergraduates in England and Wales between 2012 and 2023.

The latest Student Loans Company figures show that the total owed in student loans in England jumped by 10.5% to £294.6bn in the 2025-26 financial year. Of the extra £28bn, just over £12bn was accrued interest.

But as the debate rages, the issue of postgraduate loans has been largely overlooked. “The terms for the postgraduate loan are some of the most egregious out there,” says Oliver Gardner, the founder of the campaign group Rethink Repayment. “Because the repayment threshold is so low. And the interest rate that can be charged is always so high.”

Repayments toward a postgraduate debt kick in at a lower earnings threshold (£21,000 a year) compared with that of plan 2 loans (£29,385). Over the threshold, repayments are 6% of earnings on a postgraduate loan compared with 9% on a plan 2. Postgrad loans accrue interest at the retail prices index (RPI) plus 3% – now a rate of 6.2% although this will be capped at 6% from September.

Master’s graduates can find themselves paying off both debts at once, with two separate payments deducted from their salary each month.

Headlines about the worsening youth jobs crisis prompted 22-year-old Mariella James to embark on a master’s degree in sustainability and management at the University of Bath. She hoped it would make her more employable and “it paid off”, she says.

Months before her course came to a close, she was hired as a social media manager at a sustainable coffee company. But it did not bring the relief she expected. About £60 is deducted from her wages each month for the master’s loan, on top of £15 for her undergraduate debt.

As the total amount she owed ballooned to £60,500, even a quick glance at the figure on her Student Loans Company account became daunting. “I choose not to look,” she says.

With debt now part and parcel of gaining a degree, more people are questioning their value. In general, graduates can expect to earn more than non-graduates, but when taking account of inflation, graduate wages have declined in real terms.

Last year, lending for postgraduate studies in England rose by 8.7% to £800m, official figures show. Of the near £300bn outstanding student loans debt roughly £8bn relates to postgraduate degrees.

Gardner says: “The big feeling is that – if you have both an undergraduate and a postgraduate loan – the financial burden is so significant that it’s holding them back, particularly if you’re in a job that isn’t paying you huge sums of money.”

For Rethink Repayment, fair is “loans that act like loans, not a tax you’re stuck with for life”, Gardner says. It wants the repayment threshold to keep up with wages, to cap the interest at inflation, and for the repayment rate on plan 2 to be lowered to 5%.

One of the biggest criticisms levelled at the postgraduate loan system, Gardner points out, is that the repayment threshold has remained the same since 2016.

Peters agrees. “It just doesn’t make any sense why they’re charging such outrageous interest rates and [don’t] also bring a postgraduate threshold in line with inflation,” she says, “because £21,000 in 2016 is now worth £29,000. That’s a big difference.”

After Peters completed her master’s in bioinformatics at Cranfield University, she “walked straight” into a stable job in pharmaceutical data. She has climbed the ranks fast, and as her salary has risen so too have her loan repayments. Four years after graduating, despite having repaid £3,067 (as of February 2026), her balance has increased because of the £3,186 in interest that has been added on. “They’ve designed the system so that, basically, you’re trapped,” she adds.

For graduates whose chosen fields require a postgraduate qualification, the course is not something they tend to regret. “Because it’s something that I knew I needed to do to get the career I’m in, I wouldn’t have changed doing the master’s,” James says.

Instead, graduates argue that the postgraduate loan system needs urgent reform. Peters suggests that this debt should be interest-free. “We want to repay these loans … but if they’re charging these outrageous interest rates, then you’re just fighting an endless battle.”

James thinks that master’s fees should be lowered as the cost is shutting out students from certain backgrounds.

She says she felt like the “odd one out” on her master’s course because she was among the few who didn’t have her fees paid upfront by her parents: “I would love to pay it off in one go so I avoid the interest, but I can’t. And it just made me jealous of the people that didn’t have to get a loan.”

The current system, she adds, “is just tripping people up before they can really do anything with their lives”.

A spokesperson for the Department for Education said: “We’ve raised the repayment threshold for plan 2 loans for the first time since 2021 and have capped maximum interest rates for plan 2 and postgraduate loans this year to protect graduates from rising costs.

“Graduates – especially those with postgraduate degrees – generally benefit from higher earnings, and repaying their loan is fair for those workers who have not gone to university or graduates on lower salaries.”