LONDON: The UK government should reverse a decision to freeze the earnings level at which graduates begin repaying their student loans, an influential panel of lawmakers says.
Both Conservative and Labour governments have intermittently frozen the salary at which repayments begin, deviating from loan terms originally announced in 2010, the cross-party House of Commons Treasury Committee said yesterday in a report.
While the state is exempt from legal liability over mis-selling loans, that is effectively what successive administrations had done, it said.
The current Labour government has faced growing pressure to reform a system of loans that’s left graduates struggling under spiralling debt burdens that often carry on rising even after repayments begin.
That’s been exacerbated by successive freezes on the earnings threshold dragging poorer graduates into repayments.
In her 2025 budget, Chancellor of the Exchequer Rachel Reeves said she would freeze the level again for three years from 2027.
“Reversing last year’s threshold freeze is a modest change that would not eat up vast resources,” Committee chairwoman Meg Hillier, a Labour MP, said in a statement.
“It would go a long way to repairing the damage done to the trust between graduates and those responsible for overseeing the student loans system.”
The government said the panel’s report was an “important contribution” to the debate on improving student finance arrangements, and that it laid bare “the confused, and broken system inherited by this government”.
“We will continue to look for ways to make the system fairer for students, graduates and taxpayers in a financially sustainable way,” the government said in a statement. “It is vital students are given clear and accurate information so they can make informed decisions about their future.”
“Our report is a signal to the Treasury and the Department for Education that this can no longer be ignored. Patience has run out,” Hillier said. — Bloomberg
