UK Student Loans Under Fire as Reeves Defends Freeze on Repayment Threshold
A growing storm is building around the UK’s student loans system and tonight the focus is squarely on the government’s decision to freeze how much graduates can earn before they start paying it back.
Chancellor Rachel Reeves is defending the move as fair and reasonable. But critics say it quietly shifts the burden onto younger workers at a time when many are already struggling. And this debate is now moving beyond policy detail into a bigger question about trust, fairness and the real cost of higher education.
Under the current plan, graduates on what’s known as Plan 2 loans, mostly those who studied in England and Wales since 2012, will see their repayment threshold frozen at just under thirty thousand pounds a year from 2027. In simple terms, that means as wages rise with inflation, more of their income will be pulled into loan repayments. And they will pay more over time than they would have if the threshold rose as well.
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Rachel Reeves argues this brings different student loan plans into line. She says people will begin repaying at the same income level and that this strikes the right balance between public spending and fairness. From the government’s point of view, this is about stability and managing the books.
But for many graduates, it feels very different. Consumer finance expert Martin Lewis has openly challenged the decision, saying freezing the threshold turns student loans into something that looks and feels like a tax. He argues this breaks the spirit of the original deal made with students, many of whom were never properly educated about how these loans would really work.
The pressure is especially intense for Plan 2 borrowers because of high interest rates linked to inflation. Some graduates are being charged more than six percent interest. That does not change their monthly repayment, but it makes the total debt harder to shrink. For many, the balance keeps growing even while they are paying.
This matters because student loans now shape adult life in the UK. They affect take-home pay, saving, housing and family decisions. And they hit lower and middle earners the hardest, especially those whose careers take time to stabilise.
Politically, this could become a flashpoint. Graduates are a large and vocal group and anger is rising as living costs stay high. The question is whether the government adjusts course, or whether this decision becomes a symbol of a deeper divide between policy promises and lived reality.
This story is still unfolding and it touches millions of lives. Stay with us as we track the impact, the reaction and what could come next.
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