UK to rewrite student loan guidance after repayment row
New students will be told that loan terms can change, but the government has not committed to reversing a planned freeze on England’s Plan 2 repayment threshold.
The UK government will redesign student-finance guidance to make clear that student loan terms and conditions may change, following criticism that earlier information failed to explain the risk to prospective borrowers.
The Treasury Committee said in July that government slideshows and videos had amounted to mis-selling because they did not clearly disclose that loan conditions could be altered. The controversy followed Rachel Reeves’s announcement last November of a planned freeze to the repayment threshold for England’s Plan 2 loans.
The threshold is due to be frozen at £29,385 for three years from April 2027, compared with the current threshold of £28,470. The government has acknowledged the difficulties faced by graduates but has not committed to changing the policy.
It rejected the committee’s recommendation that future loans be made contractually unchangeable, arguing that it must retain the ability to respond to economic conditions and taxpayer pressures while keeping contributions financially sustainable.
The government said the revised guidance would be “clear and unambiguous”. A cross-party letter signed by 121 MPs and peers had called for an urgent review, citing the impact of frozen thresholds and inflation-linked interest rates on graduates’ effective tax rates.
Meg Hillier, chair of the Treasury Committee, welcomed the guidance commitment but urged Chancellor John Healey to reconsider the threshold freeze, potentially in the upcoming budget. The timing and precise content of the new guidance have not been provided.
