Over 120 MPs and peers urge chancellor to overhaul student loan repayment system

An open letter coordinated by the campaign group Rethink Repayment, signed by more than 120 MPs and peers, urges Chancellor John Healey to launch an urgent review of the student loan repayment system. The signatories contend that the existing arrangement, especially for Plan 2 loans taken by English students between 2012 and 2023 and still used in Wales, imposes an unsustainable load on the next generation of workers. Under the current rules, graduates repay 9% of income above a £29,385 threshold, a figure that was frozen by former Chancellor Rachel Reeves for 2027-2030, accelerating repayment start dates.

Education Secretary Lucy Powell has labeled the interest rate on these loans “egregious,” and the Treasury select committee’s recent report echoed concerns, citing one outlet's investigation that called past promotional comparisons inaccurate. MPs such as Laura Trott, Munira Wilson and Tom Gordon argue the system is unfair, noting that even high-earning MPs may never clear their debt. Government spokespeople say they are already taking steps to make the system more sustainable for students, graduates and taxpayers.