Student loan terms to be made clearer in England

University applicants in England will receive clearer information about student loans before they take them out, the government said. Ministers explained that authorities can alter repayment rules and that different career paths affect how much borrowers ultimately repay. They accepted some, but not all, of the recommendations put forward by MPs after an inquiry into student loans, and did not state whether they would reverse a freeze on the repayment threshold for certain graduates. The inquiry concluded that the way loans had been presented to teenagers amounted to mis-selling, a finding prompted after the BBC revealed the Department for Education (DfE) had compared repayments to “£30-a-month telephone contracts.” The latest statement focuses on Plan 2 loans, which were issued in England between September 2012 and July 2023 and remain available in Wales. Interest on these loans equals the Retail Prices Index (RPI) measure of inflation plus up to 3 %, depending on earnings. Borrowers repay 9 % of income above a threshold that is intended to rise with inflation each year; the loans are written off after 30 years. Campaigners are calling for a lower interest rate, a reduced repayment percentage and for the government to overturn last year’s decision to freeze the threshold at £29,385 for three years in England. They argue that a frozen threshold causes graduates to begin repaying sooner and to pay more than they would if the threshold kept pace with inflation. Members of the Treasury Committee urged a U‑turn on that freeze, describing it as part of a broader set of recommendations following an inquiry this summer. The Treasury and the DfE did not clarify whether ministers would unfreeze the threshold, but said in their response, “We support each aspects of the pupil concern strategy under review.” The government rejected several proposals, including: - Splitting the cost of university evenly between students and the state; - Ceasing the use of RPI to calculate interest rates; - Ensuring promotional material complies with the Financial Conduct Authority’s Consumer Duty, describing student loans as “very different to commercial loans.”