Labour leader Keir Starmer has pledged to explore options to enhance the fairness of the student loans system. This commitment comes in light of recent criticism directed at Chancellor Rachel Reeves for freezing the repayment threshold for graduates with Plan 2 student loans.

During a session of Prime Minister’s Questions, Starmer criticized the Conservatives for inheriting what he called a flawed student loans system. He highlighted the Labour Party’s efforts to reintroduce maintenance grants and expressed intentions to further improve fairness within the system and support students economically.

Accusations of exploiting students were leveled against the Tories by Starmer, who also criticized Kemi Badenoch for her remarks. Labour MPs have joined the chorus, urging swift action to address the current challenges. Helen Hayes, Labour MP and Education Select Committee chair, echoed the need for urgent reassessment of student loan value, emphasizing the importance of considering both current and future generations of university students.

Renowned finance expert Martin Lewis has demanded a reversal of the decision to freeze loan thresholds, labeling it as unethical and a breach of contract. He stressed the importance of aligning the threshold with average earnings to fulfill promises made to students. Plan 2 loans, which apply to English students who began undergraduate studies between 2012/13 and 2022/23, accrue interest based on the Retail Price Index (RPI) inflation rate, plus an additional percentage tied to graduates’ earnings.

At the Budget announcement, Reeves disclosed the freezing of the repayment threshold at £29,385 for the next three years starting in 2026. This adjustment means that more graduates will commence repayments earlier than anticipated if the threshold had risen in line with inflation. Reeves addressed queries about potential student loan changes in the upcoming spring statement, emphasizing the government’s commitment to maintaining stability in fiscal planning to foster economic confidence among businesses and households.